It depends. If the property is considered 'idle' while renovating even though you have a plan to sell, you may be able to deduct all of your expenses. See the definition below. Keep in mind that personal use, as you indicated, is not an issue in your situation.
If you decide it does not fit the definition of 'idle' below, then here is the answers you request.
- Yes, mortgage interest, property taxes and insurance for the prorated portion (99 days) go to Schedule E. The remainder of mortgage interest and property taxes go to Schedule A. There will not be any further deduction for the insurance.
- HOA Fees: You can deduct the prorated portion on your Schedule E, the remainder is not deductible as a personal expense on the individual return*.
- *Based on your comments, it's a situation where you must decide based on the tax law you recite and having an IRS codes section as your guide under audit using it to argue, should it come to that.
Idle Property:
Continue to claim a deduction for depreciation on property used in your rental activity even if it is temporarily idle (not in use). For example, if you must make repairs after a tenant moves out, you still depreciate the rental property during the time it isn’t available for rent. You could take it out of service once it is ready for sale if you meet this criteria.
@Peter_Nemo
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