When you have just bought a rental property, any work you do to get the property ready for renting is classed by IRD as capital improvement, and is not fully deductible. You have to add the costs to the original purchase price, and depreciate the total (purchase price + improvement cost) [separate land value ,land is not depreciated]over the life of the property (from the date placed in service (ready to rent).Which would be in 7/2016
Passive losses are generally deductible only to the extent of passive income.
However if you have little or no passive income, your passive losses are suspended (carried over to future tax years) until you either: (1) have some passive income or (2) sell a property with suspended losses in a qualified disposition, at which time those losses become currently deductible.
Form 8582 , Passive Activity Loss Limitations, is used to summarize income and losses from passive activities and to compute the deductible losses.
Rental Property Income and Expenses
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