Enter the costs of any additions and improvements made prior to when the property was available for rent - timing!

[debbieacog]

Hello,

I may figure this out in a moment on subsequent pages of TurboTax's interview, but for the moment I'm a little stuck.  We bought a house as a rental property and it was *already completely rented*.  Partway through the first year of ownership (2022), one unit's tenants moved out, and we did renovation before renting it out again.  I'm guessing those renovations go somewhere else and I should say $0 to the question about costs of additions and improvements made prior to the property being available to rent but I'd appreciate any commentary one way or the other if you believe you have the answer!  Thanks in advance.

[AnnetteB6 · Accepted solution]

You are on the right track.  Since the house was fully rented and you placed it in service as a rental property as soon as you purchased it, the renovations would not be entered as something that was done prior to the property being available to rent.

Instead, you will either enter the renovation cost as a maintenance or repair expense or depreciate the cost of the renovation as a component of the property itself over the life of the rental property.  Choosing one over the other will depend on what you did as a 'renovation'.  

Painting, replacing light fixtures, minor repairs, and similar things would be considered repair expenses.

Gutting and remodeling a bathroom would be depreciated as an improvement, for example.

[debbieacog]

Thank you, Annette!  Correct.  We're putting repainting under repairs.  New flooring should be depreciated.