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New Member

Rental property expenses in 2016, but not rented until 2017

I am wondering about how you file for deductions for physical improvements on a rental property that I paid for in 2016 even though I didn't start actually renting the property out until Feb 2017?
3 Replies
New Member

Rental property expenses in 2016, but not rented until 2017

It depends.

You will not be able to claim a deduction for capital improvements to your rental property on your 2016 tax return if your rental property was not available for rent until 2017. Instead you will increase the cost basis in your rental property which in turn will increase your depreciable basis (and increase the amount you will be able to claim as depreciation once your property became available for rent).

Click for more information about depreciation on rental property

However, if you rental property was available for rent in 2016 but just not rented until 2017, you will be able to claim rental expenses in 2016 from the date that the property was actually available for rent (regardless of the fact that it was not rented until 2017).

You will include all rental expenses under the rental section.

Please refer to IRS - Rental Income and Expenses more information on rental income and expenses.

To enter your rental expenses in TurboTax, log into your tax return and type "rental (schedule e)" in the search bar then select "jump to rental (schedule e)", TurboTax will guide you in entering this information

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Level 3

Rental property expenses in 2016, but not rented until 2017

But WHERE exactly do you enter this information in TurboTax.(Mac Download) It isn't clearly stated on any of the forms.

I have a rental property I purchased in July 2019. The rest of 2019 I spent repairing and improving it, so it wasn't able to rent. I put money into it, but where do I enter the depreciation deduction in TurboTax, because it is not exactly an expense?

Level 15

Rental property expenses in 2016, but not rented until 2017

@bttrainingyard Property improvements are capitalized and depreciated over time, and are dealt with in the assets/depreciation section. The below is all inclusive for what you need, based on the assumption that you placed your specific property in service in 2019, and not back in 2018 when this thread was originally started.

Rental Property Dates & Numbers That Matter.

Date of Conversion - If this was your primary residence before, then this date is the day AFTER you moved out.
In Service Date - This is the date a renter "could" have moved in. Usually, this date is the day you put the FOR RENT sign in the front yard.
Number of days Rented - the day count for this starts from the first day a renter "could" have moved in. That should be your "in service" date if you were asked for that. Vacant periods between renters count also PROVIDED you did not live in the house for one single day during said period of vacancy.
Days of Personal Use - This number will be a big fat ZERO. Read the screen. It's asking for the number of days you lived in the property AFTER you converted it to a rental. I seriously doubt (though it is possible) that you lived in the house (or space, if renting a part of your home) as your primary residence or 2nd home, after you converted it to a rental.
Business Use Percentage. 100%. I'll put that in words so there's no doubt I didn't make a typo here. One Hundred Percent. After you converted this property or space to rental use, it was one hundred percent business use. What you used it for prior to the date of conversion doesn't count.


Property Improvement.

Property improvements are expenses you incur that add value to the property. Expenses for this are entered in the Assets/Depreciation section and depreciated over time. Property improvements can be done at any time after your initial purchase of the property. It does not matter if it was your residence or a rental at the time of the improvement. It still adds value to the property.

To be classified as a property improvement, two criteria must be met:

1) The improvement must become "a material part of" the property. For example, remodeling the bathroom, new cabinets or appliances in the kitchen. New carpet. Replacing that old Central Air unit.

2) The improvement must add "real" value to the property. In other words, when  the property is appraised by a qualified, certified, licensed property appraiser, he will appraise it at a higher value, than he would have without the improvements.

Cleaning & Maintenance

Those expenses incurred to maintain the rental property and it's assets in the useable condition the property and/or asset was designed and intended for. Routine cleaning and maintenance expenses are only deductible if they are incurred while the property is classified as a rental. Cleaning and maintenance expenses incurred in the process of preparing the property for rent are not deductible.


Those expenses incurred to return the property or it's assets to the same useable condition they were in, prior to the event that caused the property or asset to be unusable. Repair expenses incurred are only deductible if incurred while the property is classified as a rental. Repair costs incurred in the process of preparing the property for rent are not deductible.

Additional clarifications: Painting a room does not qualify as a property improvement. While the paint does become “a material part of” the property, from the perspective of a property appraiser, it doesn’t add “real value” to the property.

However, when you do something like convert the garage into a 3rd bedroom for example, making a  2 bedroom house into a 3 bedroom house adds “real value”. Of course, when you convert the garage to a bedroom, you’re going to paint it. But you will include the cost of painting as a part of the property improvement – not an expense separate from it.


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