You are correct, rental expenses are only deductible in the year paid. The repairs and maintenance costs incurred preparing the property to be in shape to be rented are considered start up expenses and are amortized on either Schedule E or C depending upon where the rental income and expense are being reported. Once the property is in rentable condition and held out for rental, expenses can be deducted as ordinary and necessary expenses even if the property is not being rented.
For a more detailed discussion related to rental real estate, please see:
Rental Real Estate and Taxes - TurboTax - Intuit
