Entering Rental Expenses

[bprince67]

This rental property was purchased in 2010 and has been rented since then.  Expenses and depreciation reported annually. In October 2021 my renters moved out.  Extensive repairs and fixup expenses were incurred.  Between Covid and the cost and lack of materials and finding contractors in 2021-22, the final work was not completed until 9/1/22.  This included dry rot repair on two above ground decks in the amount of $154K + another $16K of fix-up (carpets, paint, etc).   Couldn't find a renter and the house is now for sale.  The deck repairs will be considered improvements but the 2022 depreciation schedule only shows the deck expenses and has excluded the prior cost and depreciation info.  I realize that I may not be able to depreciate in 2022 since there was no income.  But concerned because the old depreciation info is gone.  Any special reporting requirements??

[Anonymous_]

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@bprince67 wrote:

But concerned because the old depreciation info is gone. 

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Can you elaborate on the sentence quoted above? It is confounding. 

Did you not take depreciation deductions, or did you take them but now cannot locate the information concerning the amount?

Also, note that you can deduct depreciation, and other typical rental expenses, as long as the property is available for rental use.

[Carl]

But concerned because the old depreciation info is gone. Any special reporting requirements??

What do you mean "gone"? Did you convert the property to personal use on your 2021 tax return?

Basically, the property remains in service and depreciating until such time the last renter moves out, *OR* you decide to stop trying to rent it out.... whichever is *last*.

So if you were trying to rent it out after the property improvements were done, I would expect you to have "some" depreciation on those improvements.

Otherwise, if you never tried to rent it out after the property improvements were done, that means two things.

1. You will not enter the property improvements in the Assets/Depreciation section of the SCH E, and;

2. You can not report the sale in the SCH E section of the program. You have to report it in the "Sale of Business Property" section, so you can include the cost of your property improvements in the cost basis.

[bprince]

I mean on this year's turbo tax when I entered the major improvements, the depreciation schedule came up with only that improvement.  Past depreciation and property cost info was gone.  Maybe because I didn't rent it out at all last year??  It was never used a personal property. Just sat vacant all year trying to get repairs done.  I think I'm going to try and sell it this year.

[Anonymous_]

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@bprince wrote:

Maybe because I didn't rent it out at all last year??  It was never used a personal property. Just sat vacant 

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Was the property available for rent or did you take it out of service?

You can still deduct your ordinary rental expenses and depreciation while the property is vacant provided it is available for rent.

[bprince]

I mean on this year's turbo tax when I entered the major improvements, the depreciation schedule came up with only that improvement.  Past depreciation and property cost info was gone.  Maybe because I didn't rent it out at all last year??  It was never used a personal property. Just sat vacant all year trying to get repairs done.  I think I will try and sell it this year. So you are saying that I should not enter the major improvements on this year's return?? When and if I sell it I will then add the improvements as a selling expense?? Does it matter that the improvements were made in a prior year?? In other words if I sell in 2023, it's still OK to show improvments paid for in 2022??

[bprince]

I couldn't rent it out - repairs were being done and it was unsafe for renters.

[Anonymous_]

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@bprince wrote:

I couldn't rent it out - repairs were being done and it was unsafe for renters.

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In that case, you removed the property from service and now need to place it back into service with an adjusted basis for depreciation (assuming the property is available for rent).