First time landlord taxes when remodel spans into next tax year...

[Mark Winney]

Hi,

A little background.  We bought our neighbors house on June 1st 2022 with the intention of renting it.  It has taken over a year (15 months) of remodeling work to get the property to a rentable state.  Complete kitchen and bathroom tear out and replacement.  We put it up for rent mid July 2023 and have a tenant moving in 1st Sept 2023.

When it comes to taxes for for 2023 is it possible to somehow also deduct for expenditures made from June 1st 2022 to end of year.  When we did our taxes for 2022 last year we did not deduct anything other than the property taxes and purchase fees.  Would we have been a business at that point when we had not even put it up for rent till the following year?

Hope this makes sense.

Mark

[David M.]

@Mark Winney

consult a qualified professional...

your expenses prior to putting the property into service (i.e. as a rental) goes towards your cost basis.  So you don't really expense them anyway.  Since its part of your cost basis, it really becomes part of your depreciation schedule.

After you put the preoprty into service as a rental, mainly once you list it, then your expenses generally are listed on SchE...

Hope that helps.  Happy to chat if you'd like.  Good luck.