Rental Property Addition completed over 2 tax years - when to add to taxes?

magpercy · ‎December 12, 2019

We are doing a $100K addition to a $500K rental property - work began in October 2019 and will be completed in January 2020. We have been paying in installments. Can any of the payments be declared on 2019 taxes prior to work being complete? Or do we wait to declare all of it once in service - even though we put money out of pocket in 2019? thank!

PaulaM · ‎December 12, 2019

The $100K addition will be added to the Asset/Depreciation section of your rental property once work is complete (placed in service) in January 2020.

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

Carl · ‎December 13, 2019

Absolutely nothing, not one penny of this will be included in your 2019 return. If the improvements are completed in 2020 ***AND*** the improvements are placed "in service" in 2020, then when you complete your 2020 tax return in 2021 you will add your property improvements in the Assets/Depreciation section and depreciate them over the next 27.5 years from the date the asset was placed "in service" as a rental asset.