Expenses during rehab

[Tom Shepard]

Just closed on a condo yesterday and trying to figure out if the expenses incurred during rehab are deductable. Not talking about the expense of the rehab, but what about the HOA, taxes, insurance, etc. have renters lined up for a couple months from now but wasn't sure if the usual expenses that will end up being paid for from the rent were deductible as expense during this time when it's not yet rented.

[Marian Smith]

There is an IRS pub on rentals that you should download.  Get receipts and save them.....get in the habit of photographing them now and file them on your computer.

The rule is something like...when your property is ready and available for rent all costs are operating costs.  If not available...during rehab, add to cost basis.  But read up.  Marketing and make-ready take some time so a month or so isn't out of reasonable range....especially if you have a tenant.  Two months may be stretching it, but maybe not.