Rental Property with expenses but no income

[atufarie]

Thanks, Amy, but does your response apply if one floor of the structure has been rented for years and the bottom floor, formerly occupied by the owner, is the one renovated and then rented out for 1 month in 2021?  

[JulieS]

Since the bottom floor was a residence and not rented prior to the renovation., it should be considered a new rental property. 

AmyC's second answer applies "If the property has never been rented, the remodeling costs will be added to your basis when you begin renting the property." @atufarie

[waterloomarc]

We bought a house in late September to use as a vacation rental. It took until January to complete the renovations and therefore be available to rent. Am I reading this correctly that NONE of the expenses we incurred are deductible in 2021? Not even just the basic mortgage expense?

[PattiF]

Yes, unfortunately, none of the expenses are deductible until the property is placed in service on the first day that a renter "could" have moved in. The mortgage interest won't be deductible until then. 

But,  as @MayaD wrote:

You must increase the basis of the property by the cost of any additions or improvements made before placing your property into service as a rental that have a useful life of more than 1 year.

Those improvements should be entered as separate Rental Assets and are subject to depreciation. 

For more information please check How do I handle capital improvements and depreciation for my rental?

@waterloomarc

[LandlordBrad]

Can the mortgage interest, closing costs, property taxes, etc. accrued during the period after closing and before the property is made available for rent, be added to the basis of the property along with the costs of the remodel?  I purchased a house in September of 2021, remodeled the house, and made it available April 1, 2022.  I purchased the rental with a mortgage. Do I treat all of my expenses up until 4/1/22 as the cost of the rental property?

[Critter-3]

Your total cost basis for depreciating the property = purchase price +  cost of purchase + cost to remodel.  The mortgage is irrelevant.  

[leeloo]

If you cease to hold you r property for rental, meaning it is not available to be rented, expenses incurred during that time period are not deductible. If you are remodeling, you can't have it available for rent. If you have expenses such as your mortgage, property taxes, ultilites, etc, they are NOT deductible.

[distraught in NE]

I clicked the delete Rental before finding and reading your instruction.  The house needed several repairs and I ended up selling it.   I re-entered it as a rental to claim the costs involved.  Now the program insists that I jump through multiple hoops at their bidding.   All because the program 'sees' a New Rental.    I bought the house 18 years ago and it has been included in my taxes every year since then.     Is there any way to correct that?

[distraught in NE]

Now Turbo Tax will not allow me to do anything but e-file my return.   It is Not Done.   I did still own the Rental house in 2021, spent money fixing some things -  then I sold the house and nothing has been entered for that sale.

[NCperson]

@distraught in NE are you using the online edition or the CD / Download edition.... one thought (and I am confident others will respond with better ideas) is to begin the return all over again, transfering the data from the 2020 tax return....

[distraught in NE]

online

[MClark4]

I sold the rental property in March 2021. I incurred normal expenses January February and half of March including condo fees, utilities, and mortgage. Where can I deduct that from my profit

[DoninGA]

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@MClark4 wrote:

I sold the rental property in March 2021. I incurred normal expenses January February and half of March including condo fees, utilities, and mortgage. Where can I deduct that from my profit

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Rental property income and expenses are entered on Schedule E during the time that you were the owner of the property.

See this TurboTax support FAQ - https://ttlc.intuit.com/turbotax-support/en-us/help-article/import-export-data-files/enter-income-ex...

[leeloo]

This is the more appropriate link: https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-credits-deductions/kinds-rental-prop...

The first paragraph states:
The IRS lets you deduct ordinary and necessary expenses required to manage, conserve, or maintain property that you rent to others. You're allowed to deduct these expenses if your property is vacant, as long as you're trying to rent it.

[Xgalvinx]

@leeloo  would that apply to a 2 family residential rental where one apartment is rented and one is being remodeled?