Investors & landlords

An interesting fact about rental properties is that all of the planning, organizing, and remodeling, while all done for the express purpose of making a property a rental property does not make the property a rental property.  What makes a property a rental property is when the owner makes the property available for rent, such as posting a "For Rent" sign on the property or posting the property online.  Whatever happens before the date the property is made available for rent, or whatever the owner's intention are with respect to the property before its made available for rent, does not matter for purposes of deducting rental expenses.   

Thus, if the pre-rental expenses cannot be deducted as rental expenses because the property does not meet the definition of a rental property, (it has not been made available for rent) then such expenses should be added to the basis of the property.  

Here is a chart from IRS Publication 551 which contains items that increase basis and those items that decrease basis.  Below the chart is a link to IRS Publication 551.  

IRS Publication 551: Basis of Assets

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