Rental property leased the next year

[ram10]

I purchased and closed on a property with the intent to use it as a rental property in Nov 2021.

I did two trips, one before we went under contract and another to get the home ready to rent.

We did a large number of repairs (fixing broken toilet, carpet cleaning, paint fix, etc), improvements (new HVAC system), and new appliances.

The home was listed for rent mid-December and finally rented in 2021.

A couple questions are:
* Do I start depreciating the house starting this year or the year it started renting?

* Do I put the repairs and improvements into the turbo tax expenses/assets section although most of them were made before the property was listed?

* How do I calculate the cost basis of the property (would travel, repair, improvements, appliances, all be included)?

[MaryK4]

You can start depreciation in 2021.  You can begin to depreciate rental property when it is ready and available for rent.  You place property in service in a rental activity when it is ready and available for a specific use in that activity. Even if you aren’t using the property, it is in service when it is ready and available for its specific use.

You should use all the repairs and expenses to adjust your basis, including the travel. 

The basis of property used in a rental activity is generally its adjusted basis when you place it in service in that activity. This is its cost or other basis when you acquired it, adjusted for certain items occurring before you place it in service in the rental activity.  To figure your property's basis for depreciation, you may have to make certain adjustments (increases and decreases) to the basis of the property for events occurring between the time you acquired the property and the time you placed it in service for business or the production of income. The result of these adjustments to the basis is the adjusted basis.  You can’t deduct the cost of traveling away from home if the primary purpose of the trip is to improve the property. The cost of improvements is recovered by taking depreciation

[Carl]

You should use all the repairs and expenses to adjust your basis, including the travel.

I keep asking for a reference on where the IRS says you can use repair expenses to adjust basis, and continue to be ignored. That's because expenses incurred in preparing a property for rent, for the very first time, are not deductible. 

Now do not confuse expenses with property improvements. Those are two totally separate and different beasts.

fixing broken toilet - If that was a repair to an existing toilet, it's not deductible anywhere on your tax return since the expense was incurred before the property was placed in service. If you removed the broken toilet and replaced it with a brand new toilet, that's a property improvement that adds to the cost basis, regardless of when it was done.

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, carpet cleaning, paint fix, etc - Those are maintenance expenses and can not be used to change the cost basis of anything. Also can't be claimed anywhere on the tax return since the property was not in service prior to the expense being incurred.

 improvements (new HVAC system), and new appliances. All of these qualify as property improvements. The costs can be added to the cost basis of the structure. (not the cost basis of the land)

Wile you can enter each improvement separately in the assets/depreciation section, I don't recommend it. Since the property and all improvements were placed in service on the same date in 2021, you can just add the cost of these improvements to the cost basis of the structure (not the land) and have one single entry in the assets/depreciation section that includes the property and all the property improvements. That way, when it comes to selling the property later, you won't have to deal with the hassle of the disposition of each individual asset.

[ram10]

Thanks both, this is very helpful!