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twojacks2
New Member

Prior to the purchase of a rental duplex we paid for a comprehensive property inspection. There was no mortgage lender involved. How is the inspection fee recorded?

 
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DanielV01
Expert Alumni

Prior to the purchase of a rental duplex we paid for a comprehensive property inspection. There was no mortgage lender involved. How is the inspection fee recorded?

Add it to the basis of the property.  For instance, if the duplex cost 120,000, and the inspection fee was $2,000, the basis in the unit is now $122,000.  This is what you will use as your cost and depreciation basis.

Because it was an expense prior to the purchase of the property, it cannot be used as a direct expense against the rental income, but must be included with the value of the property and depreciated over time.

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DanielV01
Expert Alumni

Prior to the purchase of a rental duplex we paid for a comprehensive property inspection. There was no mortgage lender involved. How is the inspection fee recorded?

Add it to the basis of the property.  For instance, if the duplex cost 120,000, and the inspection fee was $2,000, the basis in the unit is now $122,000.  This is what you will use as your cost and depreciation basis.

Because it was an expense prior to the purchase of the property, it cannot be used as a direct expense against the rental income, but must be included with the value of the property and depreciated over time.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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