Turbo Tax 2017 On-line - Reporting rental acquisition expenses

Investor · Annandale, VA · Member since 2017 · 16 posts · 3 votes

Hi, all. I closed on my rental property in January 2018, but I incurred expenses to buy it at the end of 2017. Normally, it's pretty straight forward on Turbo Tax, when the expenses to purchase a rental and the income from the rental are in the same year. How do you normally handle reporting this? I haven't been able to come across the answers on the Intuit and IRS websites yet.

Thanks,

David

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Logan AllecBusiness Member
Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes
8y
@David Huynh Generally, expenses incurred to facilitate the purchase of real property are capitalized to the basis of that property. So in your case it is very likely that you would not be able to deduct those expenses on your 2017 return at all but would rather keep track of them and add them to the basis of your property, which you will report in the year that it is placed in service. Check with your tax professional about your individual situation and nature of your expenses.
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David Huynh
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Investor · Annandale, VA · Member since 2017 · 16 posts · 3 votes
8y
Thank Logan.
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Basit SiddiqiBusiness Member
Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
8y
@David Huynh
I agree with Logan here. Expenses to acquire a rental property are capitalized and depreciated once the unit is placed into service.

Payments to a bank for an appraisal or an inspector for a home inspection are items that are normally paid for before closing.
These items are added to basis and depreciated once put into service.
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