When can I start deducting short term rental expenses?
9 Replies
Padric Lynch
Rental Property Investor from Craven County, NC
posted about 1 month ago
I have an apartment unit that will go online as a short term rental, starting April 1st. I am currently living in the unit and will have to purchase furnishings, supplies, and services to have it operational. When can I start writing off expenses? Do I need to start advertising the unit now while making it ready, in order to write off the start up expenses?
John Underwood
Investor from Greer, South Carolina
replied about 1 month ago
You should check with your CPA.
I beleive once you are advertising you can deduct expenses.
Nancy Bachety
Rental Property Investor from Sag Harbor, NY
replied about 1 month ago
Normally, when you place it in service you can expense certain items. Buying furnishings is ongoing and always an expense if it’s used in the property. Ask @Nicholas Aiola . He’s the BP whiz.
Marc Rice
Real Estate Agent from Columbus, OH
replied about 1 month ago
I am not a CPA but Section 179 expenses is what you want.
Paul Sandhu
Investor from The worst town to live in, Kansas
replied about 1 month ago
In the same calendar year you incurred the expenses.
Nicholas Aiola
CPA & Investor from New York, NY
replied about 1 month ago
Thanks for the mention @Nancy Bachety !
@Padric Lynch As Nancy mentioned, expenses after the in-service date - when it is ready (livable) and available (advertised for rent) - are deductible as operating expenses; expenses leading up to the in-service date will likely be capitalized and added to basis.
You'll want to make sure you and your CPA are on the same page when filing your tax returns so as to avoid any misclassifications.
Padric Lynch
Rental Property Investor from Craven County, NC
replied about 1 month ago
@Nicholas Aiola In my case, if I advertise now that my unit will be available in April (i.e. listing it on Airbnb), I will be able to deduct expenses that I am paying for to prep it?
Nicholas Aiola
CPA & Investor from New York, NY
replied about 1 month ago
@Padric Lynch Remember, in service = ready and available. If it's advertised now that it won't be available until April, it won't be in service until April.
Wesley Myers
Rental Property Investor from Inlet Beach, FL
replied 25 days ago
@Nicholas Aiola awesome info. We’re in the same boat want to make sure I’m clear. We spent about $10k in 2020 getting ours ready. It should be live and available this March. I can claim the $10k I spent in 2020 on my 2021 tax return?
Nicholas Aiola
CPA & Investor from New York, NY
replied 25 days ago
@Wesley Myers It will likely be added to the property's basis and depreciated over 27.5 years beginning on the in-service date in 2021.