"Real estate start up costs that exceed $5,000 must be amortized. "Amortize" is a fancy word us accountants use that really just means "depreciate" or recovery of your costs. The major difference is that you amortize intangible expenses and depreciation tangible expenses.
Prior to buying a rental, all of the qualifying real estate start up costs you incur will be added to the basis of your new rental. There is one minor exception to this rule: you can deduct up to $5,000 of your real estate start up costs in the year that your rental is placed into service.
The excess amount of real estate start up costs over $5,000 will be amortized over a 180 month period. So each month, you will get to recover some of your start up costs for 180 months.
As an example, let's say you incur qualifying real estate start up costs of $6,000. You can elect to deduct $5,000 in the year your rental is placed into service. The remaining $1,000 is spread out over a 180 month (15 years) period and slowly recovered. You don't have to make the election to deduct $5,000 and can instead amortize all of your start up costs.
Now for some fancy talk. To make the $5,000 deduction election, you must attach a statement required by Regulations sections 1.195-1(b), 1.248-1(c), and 1.709-1(c). The statement will have an itemized listing of the start up costs you are electing to currently deduct. Another good reason to keep excellent records of your expenses".
Reference: https://www.therealestatecpa.com/blog/real-estate-start-up-costs
