multi unit rental property purchased and renovated in 2023 but won't be ready to rent until 2025.

[stevec333]

Hi, I bought a two-family rental property in 2023 and had to gut it. The work is still ongoing now. I have had many expenses from holding costs, renovations, taxes, etc in both 2023 and 2024 but it wont be rented until 2025.

I want to confirm that the correct way to report these expenses for both years will be to wait until 2025 even to add the property to a return and add all of the expenses from the previous two years to the adjusted cost basis of the property on my 2025 return.  Is that correct?

Thank you!

[stevec333]

Is this true even though I elect to classify all of my rental properties as an enterprise and the rental income as Qualified Business Income?