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wife-mom-math
Returning Member

I had a plumbing expense for rental property in Nov 2019. However, actual bill will only be charged to me in Feb 2020. Will this expense be for tax year 2019 or 2020?

FYI. My association covered the bill first in Dec 2019 (a common practice for my building), but then it will be charged to owner in the following month.
3 Replies
ReginaM
Expert Alumni

I had a plumbing expense for rental property in Nov 2019. However, actual bill will only be charged to me in Feb 2020. Will this expense be for tax year 2019 or 2020?

It depends. 

 

If you are a cash basis taxpayer you report income on your return in the year you actually or constructively receive it, regardless of when it was earned.  You report your expenses when you pay them, not when you incur them.

 

If are on an accrual basis, you report income when you earn it, rather than when you receive it.   You deduct your expenses when you incur them rather than when you pay them.

 

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AmeliesUncle
Level 13

I had a plumbing expense for rental property in Nov 2019. However, actual bill will only be charged to me in Feb 2020. Will this expense be for tax year 2019 or 2020?

Although what Regina said is correct, I am leaning towards that is a 2019 expense, even for a cash basis taxpayer.

 

Without knowing the specifics about the arrangement with your association, it may be similar to charging an expense to a credit card (a third party in the transaction).  So if the plumber was actually paid in 2019, and if you are legally obligated to pay the association (a third party) for that fee, I think it would be similar to charging it to a credit card, in which case it would be deductible in 2019.  But as I said before, it would depend on the specifics of the arrangement with the association.

 

However, in the event it was an in-house plumber (an employee of the association, rather than an independent contractor), then there is no "third" party, and your payment would not be deductible until 2020.

 

Anonymous
Not applicable

I had a plumbing expense for rental property in Nov 2019. However, actual bill will only be charged to me in Feb 2020. Will this expense be for tax year 2019 or 2020?

I agree with ReginaM except that if you put the expense on your credit card in 2019, it is considere paid in 2019.  not paid or put on a credit card until 2020, it's a 2020 expenses. 

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