You are right in that you don't qualify to claim any startup costs. That "startup costs" area is a grey area among CPA's and Enrolled Agents. But from the one tax attorney I talked with many years ago, it's not grey at all. His (and mine) interpretation of it is that it's just flat out not deductible under any circumstances for SCH E income/expenses. The IRS Pubs deal with startup expenses for an "active" business, which is reported on SCH C. But rental income is passive, and this is particularly true in your case. So claiming startup expenses yearly would eventually raise a flag, and chances are the IRS would disallow all startup expenses for prior years also. You don't need that headache, or the expense of what such IRS findings would cost you down the road either. But it's something that I would like to be 'fly on the wall' for if I ever hear of it being challenged in court.
Basically for your situation All repair and maintenance expenses incurred prior to the property being available for rent are just flat out not deductible. But property improvements (which you refer to above as capital improvements) are in a sense. Remember, as stated below property improvements add real value to the property, regardless of when those improvements are done and regardless of if the property is classified as a rental or not.
As explained in the answer below, property improvements are entered in the assets/depreciation section. You tell the truth on both dates asked for and you'll be fine. First, there's the date the cost for the improvement was incurred. Heck, that could have been years ago, so long as you incurred the expense after you purchased the property. Then you're asked what date that property improvement was placed "in service". That's generally the same date the property was placed in service and available for rent. Depreciation starts on the "in service" date, not the date you incurred the cost of that improvement.
Now you say there's "landscaping" expenses. What kind of landscaping? I ask, because if you do something like cut down the forest of trees in the back yard so as to make the back yard actually usable, that's a land improvement that adds to the value of the land. But it's not a deduction or depreciable. It just helps by adding to your cost basis so as to reduce your taxable gain when you sell.
But if you're talking sprucing up the flower beds, cutting the grass, treating the yard for ticks and the such, that's not landscaping the IRS would agree adds to your cost basis, as it's done on a recurring basis. It's a maintenance expense and if incurred before the property is available for rent, then you just can't deduct it. But lets look at this a different way if you are willing to amuse me.
You say you only make the property available seasonally. So if I'm understanding your correctly, you're saying that if a renter wanted to sign a 12 month contract, you would refuse? I'm asking because if you do not use the property for personal use at any time during the year, why not make it available the whole year? I'm asking these questions because the action of removing it from service and then placing it back "in service" each year is costing you in lost deductions. What's more important to you? Keeping the depreciation to a minimum each year? Or taking all the deductions you possibly can legally each year without raising flags with the IRS?
