Rental property gutter repair started in 2021, finished in 2022. I paid $2000 in 2021 and the balance in 2022. I use the cash accounting method. How do I record this?

[tandemstoker]

Total repair over $2500. Since work not finished until 2022, I don't think they were put into service until 2022. I use the cash accounting method so I am not sure where/how to report the $2000 expense incurred in 2021.

[Vanessa A]

Was the rental property not in service during these repairs or the gutters weren't in service?

You would report the $2,000 as a repair expense in 2021 since you paid the money in 2021 if this property was already being rented out.

If this was an expense to get the property ready to be a rental then it would not be deductible. 

[tandemstoker]

Thank you for your response.

Yes, the property was rented out during the time of the repairs. So I will record it as a $2000 expense this year.

The payment for 2022 was $4000. So I will report that on my 2022 taxes as a $4000 repair. Correct? Thanks again.

[Carl]

You can not expense this $6000 project since it's cost was over $2,500. You have to enter it as an asset and depreciate it over the next 27.5 years.

When you paid for it doesn't matter. Depreciation doesn't start until the project is placed "in service". Since that did not happen in 2021, you'll enter nothing for this on your 2021 tax return. Instead, you'll enter this $6000 asset on your 2022 return with an in service date of the date the project was completed.