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PecanBox
New Member

Expenses for vacant rental property

I converted single family home from personal use on 7/1/16, did some repairs and upgrading, and listed for rent in December.  It is still vacant.  Can I deduct expenses?  I have another rental property which is making money.
1 Best answer

Accepted Solutions
view2
New Member

Expenses for vacant rental property

For depreciation purposes, treat the property as being placed in service (ready to rent) on the conversion date(Schedule E)

Any repairs or work done on a building before it is placed in service as a rental property is capitalized.; they are not a current deduction.

If you used the property for personal purposes before changing it to rental use, its depreciate basis is the lesser of its adjusted basis or its fair market value when you change it to rental use. 

Your adjusted basis on the date of the change—that is, your original cost or other basis of the property, plus the cost of permanent additions or improvements since you acquired it, minus deductions for any casualty or theft losses claimed on earlier years' income tax returns and other decreases to basis.[separate land value ,land is not depreciated] .

Turbotax will separate when you enter the total calculated adjusted value then the land value.

Your purchase date is entered on this screen.

Continue

Screen "Tell us about This Rental Asset"

No To : Have you  used this item 100% for this business since you acquired it?"

In the drop down select first  used for personal before business.

Ensure you use date placed in service ready to rent 12/01/2016 [100% is from this date]

Passive losses are deducted  only against passive income, if there is not enough income the difference is a carryover to future years .

View solution in original post

ratings image
5 Replies
Critter
Level 15

Expenses for vacant rental property

The rental started when you advertised it for rent ... so you can deduct one month of expenses & depreciation.   The repairs & upgrading is added to the basis of the property.
Carl
Level 15

Expenses for vacant rental property

You just need an explanation of dates.
Date of conversion: Generally, this date is the day AFTER you moved out of the property.
Date in service: The first day a renter "COULD" have moved in.
Days rented: The number of days starting from the first day a renter "COULD" have moved in.(It's okay for your rental income to show zero.)
view2
New Member

Expenses for vacant rental property

For depreciation purposes, treat the property as being placed in service (ready to rent) on the conversion date(Schedule E)

Any repairs or work done on a building before it is placed in service as a rental property is capitalized.; they are not a current deduction.

If you used the property for personal purposes before changing it to rental use, its depreciate basis is the lesser of its adjusted basis or its fair market value when you change it to rental use. 

Your adjusted basis on the date of the change—that is, your original cost or other basis of the property, plus the cost of permanent additions or improvements since you acquired it, minus deductions for any casualty or theft losses claimed on earlier years' income tax returns and other decreases to basis.[separate land value ,land is not depreciated] .

Turbotax will separate when you enter the total calculated adjusted value then the land value.

Your purchase date is entered on this screen.

Continue

Screen "Tell us about This Rental Asset"

No To : Have you  used this item 100% for this business since you acquired it?"

In the drop down select first  used for personal before business.

Ensure you use date placed in service ready to rent 12/01/2016 [100% is from this date]

Passive losses are deducted  only against passive income, if there is not enough income the difference is a carryover to future years .

Carl
Level 15

Expenses for vacant rental property

One thing to be sure of, is that you don't confuse yourself after dealing with the "have you used this item 100% for business use since you acquired it?" question, (which you will answer NO), with the screen that asks you for the number of days of personal use. Read the small print on the screen that asks for personal use days. Your answer to the number of days of personal use will be a BIG FAT ZERO. This is important. It's asking how many days you lived in the property as your personal, primary residence AFTER you converted it to a rental. The days you lived in it before you converted it to a rental, just flat out do not count for anything. Period. (I see more folks answer the personal use days questions wrong, more than any other question concerning rentals.)
PecanBox
New Member

Expenses for vacant rental property

Wow - this is super helpful and informative.  THANK YOU!

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