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For the CPAs out there...
I bought my first rental property in October 2020 - an owner-occupied duplex. We spent the first 3 months (Oct-Dec) rehabbing the rental unit and started the lease on December 31st, 2020. I kept a log and all of my receipts for the rehab thinking I'd be able to deduct these expenses for 2020...
But unfortunately I just read per the IRS, "Expenses you pay to prepare a property for rent for the first time are not deductible because there has been no rental activity."
Can someone elaborate on this or send some advice on next steps? Will I ever be able to deduct the costs to get this unit up and running? We used this time to do cosmetic repairs and updates. It is not that the unit wasn't functional.