Investor · White Haven PA · Member since 2014 · 363 posts · 221 votes
I Purchased a few pieces of raw land and also a few very run down houses that I plan to not renovate for the next couple of years. (They will just sit)
So, both the land and uninhabitable homes are not going to be be rented or available for rent for the next few years. Do I deduct expenses such as utilities, landscaping and property taxes annually or just add those expenses to the basis when I sell?
I've done a couple DIY fix-up rentals and the guidance has been that everything before they are "placed in service" (meaning ready to rent or otherwise earn $$) is rolled into the basis. I would research your situation from that angle.
Yep, lmk if I got this right. So basically, you're asking if you can deduct expenses like utilities, landscaping, and property taxes on your investment properties with no income stream.
In a nutshell, if your properties are not being rented or available for rent, then you cannot deduct those expenses as rental expenses. However, you may be able to capitalize those expenses and add them to the basis of your properties. This would increase the cost basis of the properties and reduce the gain when you sell them.
I remember when I had a property in Baltimore that was vacant for a few years before I decided to renovate it. During that time, I wasn't able to deduct any expenses as rental expenses. Instead, I capitalized those expenses and added them to the basis of the property.