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Hi @ColeenD3,

Thank you very much for the quick and detailed reply. If I may ask just a couple of clarifying questions:

(1) Would we treat this as “Vacant rental property” rather than “Vacant while listed for sale”?

The property was first our primary residence, then converted from personal use to rental property (with the express rationale that we wanted the market to recover before selling). The remodel began shortly after the tenants moved out with the aim of improving its resale value. We didn’t live in it, store things in it, or use it for another business during the remodel. The work was completed and we ultimately listed it for sale in early 2022. We did not list it for rent during the remodel or after, but had it not garnered the price we felt it deserved, we would have put it back on the rental market for some period of time before re-attempting to sell.

(2) Am I understanding correctly that regardless of when a bill comes due or is paid during the tax year, only the pro-rated portion of that bill which directly corresponds to the rental period should be deducted (e.g., if it is a rental for 3 months during that year’s property tax period, then ¼ of the property tax can be deducted)? 

(3) How do we accurately enter assets that were paid for in 2021 but put into service in 2022?

With regard to the appliances and other assets, a few challenges have us stumped.

(A) Many of these appliances were purchased in 2021 but not installed until January or February of 2022 and then, I suppose, not placed “in-service” until the property was made available for sale in March of 2022. If I enter an asset, like a new refrigerator, I select “I purchased this asset new” and I am required to choose either: 

• “Yes, I’ve always used this item 100% of the time for business” and then an in-service date, which can’t be in 2022. I assume if I do choose a date in 2021 (the date we bought it? December 31st??), that will start depreciating the asset, which I believe would not be appropriate until it is in-service.

OR I must choose

• “No, I have not always used this item 100% of the time for business”, which seems more likely the correct route for an item in storage or in transit (based on the associated Learn More note that categorizes storage as personal use). I am still required by TurboTax to enter an in-service date in 2021 and also a percentage of time used for business, which must be at least 1%. I could put 12/31/2021 and 1%, which is as close to accurate as I am allowed, but it still doesn’t seem quite right.

Alternately, I could ALSO select 

• “The item was sold, retired, stolen, destroyed, disposed of, converted to personal use, traded in, or given away (or it’s no longer being used in this business for some other reason), with the assumption that a fridge sitting in transit could be considered personal use (storage, as above) or otherwise no longer being used for business. If that is proper, would the date of retirement be the same as the date of purchase? This doesn’t feel quite right, and I wouldn’t want the asset to be deleted because I marked it retired. 

Finally, I suppose I could

• Wait until 2022 to enter these items as assets (though purchased in 2021). However, because the expenses are in the 2021 tax year, I worry that this approach is not appropriate. 

(B) Should assets under $2500 just get expensed under the de minimus safe harbor election (treasury Decision 9636) in 2021? I’ve seen it suggested on this forum to put those items in Schedule E Miscellaneous Expenses with a note mentioning de minimus safe harbor. This won’t help for the larger items but would avoid straddling the 2021/2022 tax year for the smaller stuff. We run our rental properties as a business, but I am not sure that we qualify in this case.

Any thoughts are much appreciated and thank you for your help. We have recently unfortunately had an extremely disappointing experience with our longtime accountant and are thus going it on our own and are so very appreciative of your guidance and this forum.