Investor · Loveland, CO · Member since 2014 · 14 posts · 0 votes
Purchased a buy and hold and am in the long........ process of remodeling. Does this go on the schedule E along with my other buy and hold since I did not rent at all last year?
The money you are spending now is not an 'expense'. It is a 'capital improvement' and will be used to adjust the depreciable basis of the property when it is placed in service as a rental.
I'm sure your wallet can't tell the difference between an expense and a capital improvement at this point, but that's how the tax code classifies them.
What @Linda Weygant is telling you is that you don't have any deductible expenses regardless of the tax year you spend the remodel money All of your costs to make the property rent-ready are treated as a capital improvement and increases your tax basis. Once the property is in service as a rental, you can begin to recover a portion of that cost each year with a depreciation expense.
The money you are spending now is not an 'expense'. It is a 'capital improvement' and will be used to adjust the depreciable basis of the property when it is placed in service as a rental.
I'm sure your wallet can't tell the difference between an expense and a capital improvement at this point, but that's how the tax code classifies them.