I am working on my first rental property. My plan was to BRRRR it. I purchased it and am nearly done rehabbing it.
But, I keep hearing various things about not being able to deduct repair expenses and mileage for a rental property if it isn't advertised for rental, or if it is your first property. The email answer I received from my CPA was not clear. (I'm sure I will talk to him for clarification, or find a new CPA, but I wanted to reach out to the BP community).
Apparently there is a podcast about this topic...and surely it has been discussed on forums...but I cannot seem to find this via the search function.
I'd appreciate any assistance.
Correct, in your case you can’t expense because you never offered the property for rent first.
Many large repairs will be depreciated over time.
Also I find it more amusing than I should that @Anthony Wick is "hoeing" an accountant, (this maybe an amazing auto-correct story)
Yeah, it's kind of like pimping, I think.
@Dick Stevens , where can I learn more about this?
You got some solid advice already.
You are not eligible to expense items until the property is ready for its intended use. Its intended use in this case is that the property is ready for someone to live in which includes items as a roof over the house, a working bathroom, etc.
The cost will be added to basis and depreciated over its useful life.
Think of it like this
Property A is rent ready and cost $200,000.
Property B is $150,000 and it will cost $50,000 to get it to the same condition as Property A.
The IRS wants both of these properties to be at a similar starting point.
If it wasn't the case - You would be reporting $0 of income since its not rented but take $50,000 of expenses.