Risk of Audit

[Kyler J Sloan]

My CPA is advising that I should not claim all of my expenses using the "STR Loophole" in order to avoid an audit. I renovated a STR and ended up spending an amount equal to my annual gross income. This was because the house was not put into service until the following year; so, the expenses for 18 months were expensed this year.

He says that if one is initiated by claiming too much, they will probably re-classify the expenses to be depreciated and not expensed in year 1. 

Has anyone else had this happen? 

Does anyone know if this is common enough to worry about? 

Thanks in advance. 

[Ned Carey]

@Kyler J Sloan I don't have a clue what the "STR Loophole" is. However generally anything spent before being put into service is considered basis not an expense.