When it comes to rental properties, startup costs and depreciation work a bit differently:
1. **Startup Costs**: Generally, startup costs for a rental property can include expenses incurred before the property is ready to rent, like repairs and improvements. These costs are typically capitalized and added to the basis of the property. Once the property is placed in service (i.e., available for rent), you can begin depreciating these costs as part of the property's basis over the applicable recovery period.
2. **Depreciation of Equipment**: For used equipment purchased for the rental property, depreciation begins when the equipment is placed in service, not when it was purchased. This means you start depreciating the equipment in the year it becomes available for use in your rental activity. In both cases, the key point is that depreciation and amortization start when the property or equipment is placed in service, meaning it's ready and available for its intended use.
