The first is that there's no consensus between tax professionals, and the second is that you will not like my personal interpretation.My interpretation is:Until the property is "placed in service" - everything goes into basis.Illustration.You buy a property July 1st.You finish rehab November 1st and put the property on the market.Your tenant moves in January 15th.The property was placed in service November 1st, and it does not matter that the tenant did not move in until the next year.Everything paid between July 1st and November 1st, including interest and utilities, goes into basis.

As always, consult with your licensed tax professional for qualifying, tax implications and strategy.

@Victor Yang To use the rental losses to offset any active income (W2), you'd have meet Real Estate Professional status (which would be difficult to do with a W2 job because you'd have to work more on real estate than any other job to qualify) OR have an AGI of $150K or less.

My lease requires professional carpet cleaning, which would cost more than $500 for a home of that size.Yes, it's reasonable to reduce the cost because she was such a long-term tenant.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I invested as a sophisticated investor, although I have no professional accreditations.

Take full advantage of available tax incentives by working closely with a tax professional.

Also look back on their application and see if you missed any 'red flags" so this can be a valuable learning experience for you.

One key takeaway for future projects is the value of hiring professional painters.

Readers should seek professional advice.