FaithY
Expert Alumni

Deductions & credits

No, you would not deduct the $1,000 from the basis of the property. The $1,000 is not considered income to you in 2017. You would deduct the $1,000 from your expense when you pay the taxes in 2018 so you would only expense $2,000 in 2018.

https://www.irs.gov/pub/irs-pdf/p527.pdf