I purchased a rental property in Oct. 2016. I spent over $12,000 renovating the property in 2016. I had no rental income in 2016. How do I report my expenses for 2016?

[view2 · Accepted solution]

When you have just bought a rental property, any work you do to get the property ready for renting is classed by IRD as capital improvement, and is not fully deductible. You have to add the costs to the original purchase price, and depreciate the total (purchase price + improvement cost) [separate land value ,land is not depreciated]over the life of the property (from the date placed in service (ready to rent)