@gigogol It sounds like you made a mistake last year. The rule is that it has to be available for rental if it can be - if you are in the process of remodeling it you can't rent it til you finish remodeling. So it's not a catch 22. You just have to understand where you're at. You should turn it back into a rental for 2020 and dispose of your rental property in 2021. That is an accurate representation of what occurred.
As far as the costs of the remodel you did in 2020 and 2021, you should not expense those as rental expenses in either year. As @Carl points out above your rental improvements would become another depreciable asset so in this case you will add the cost of the remodel to your basis for the house at the time of the sale.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
