Expenses from fixing up rental property, prior to being rented

Expenses from fixing up rental property, prior to being rented

Kansas City, KS-MO · Member since 2013 · 36 posts · 10 votes

I purchased my first rental property in 2016 and spent ~$15K on material/labor to fix up the property prior to renting. The house was vacant when I purchased in September of 2016, and I did not have a tenant in place until March of 2017. 

Am I able to deduct expenses from this renovation? Some people have told me no because the expenses were incurred before I rented the home. This seems odd to me because I purchased the home as a rental; I never lived there or intended to live there. 

I did most of the improvements myself, but have expenses in material, tools, utilities, food for people helping me work, and some subcontractor costs. 

I've received some mixed information on this - if someone can provide some clarity on this I'd really appreciate it. 

0Reply
22 views

1 Reply

Jump to latestLatest
  • Lance LvovskyPro Member
    Accountant · Fort Lauderdale, FL · Member since 2013 · 1k+ posts · 753 votes
    9y

    Expenses incurred to rehab and renovate a property are capitalized and depreciation starts the date you place the property in service. The "in-service date" is when you advertise the property as available for rent. So to answer your question, you cannot expense the 15k in 2016.

Join the conversationCreate a free account to reply, vote on answers and follow this thread.