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.
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.