Tax Question - Closing Rental Property in December

[Priyanka K.]

Hello fellow investors! 

I am working on a 'Buy and Hold' deal and wondering if I should close in December or January for expenses and deductions as I may not be able to rent it out till next year and thus will have no rental income from that specific property this year.

I have other rental properties and I read somewhere that I can combine all my rental income and all rental related deductions and add them all up as rental business income and expenses and deductions don't have to be from specific property income. All these rental properties are under my name and not any LLC.

I like the deal and would like to close it asap and get some work done during the holidays but don't want to lose out on closing cost related expense deductions. 

Any feedback will be greatly appreciated.

thanks,

priyanka

Real Estate Investor and Agent in Dallas, TX

[Basit Siddiqi]

@Priyanka K.

I don't think it matters when you close on the property for buying purposes.

You can actually start claiming expenses even though there is no rental income.
What you have to prove is that the tenant is rent-ready or will be rent-ready in the near future.

Otherwise, if its not rent-ready or will not be in the near future - the cost of the purchase and any repairs are capitalized and you start expensing once the unit is rent ready.

In your scenario - I would buy it before the holdidays so you can get started on the rehab process.