Rental Property Purchased during Current Year

[Eddie Glastname]

Purchased house during 2022 as 100% Rental Property

My questions are around what can I deduct regarding the purchase of the property.  Note that I own 1 other that was purchased as a residence than converted to rental when we bought another home.

The property is in a Senior Living area.  they have what are referred to as Recreation Centers.  Every new purchase of a house in this HOA area requires a 1 time $4000 payment to the Recreation HOA plus yearly dues.  Can the 1 time $4000 payment be depreciated?  If so, what "Code Section" would I choose?

Closing Costs - (Cost of House - Land Value = Basis for use in calculating depreciation)   Can I add in closing costs to the purchase price of the house to increase my Basis.  If house was $200,000 and land was worth $$75,000, my basis would be $125,000.  Can I add things like Title Fees, Appraisal Fees,  Loan Fees, etc. to increase my basis?

[Critter-3]

Was it ever rented or available to rent ?    If not then there is nothing you can deduct except possibly RE taxes and mortgage interest if you itemize deductions on the Sch A. 

[DaveF1006]

Yes, you can deduct HOA fees if your home purchased is strictly rental property. In addition, you may add things like Title Fees, Appraisal Fees, to the basis of your house. Please read Pub 530 for fees that can increase your basis of your property.

You mention loan fees and these cannot be added to the basis  can be a deductible expense.  Also things like real estate taxes, mortgage interest, property insurance that are listed on the settlement statement are deductible expenses for your rental property. 

[Carl]

Assuming the property was in service and at least "available for rent" in 2022:

Cost associated with acquisition of the property are added to the cost basis of the property and depreciated over time. Typically, the program will asks you for qualified costs and take care of that for you. One example of such a cost would be the title transfer fee paid at the courthouse to remove the seller's name from the deed, and replace it with the buyer's name.

Cost associated with acquisition of the loan are amortized and deducted (not depreciated) over the life of the loan. Examples would include loan application fees and survey fees if (and only if) a survey was required by the lender as a condition of the loan. Typically, (or at least in my experience) the program does not do a very good job of separating these fees out for amortization. So it's something you'll need to confirm was actually done by the program. If not, then you can enter them manually as "other" asset classified as a SEC163: Loan Fees type of asset.

Every new purchase of a house in this HOA area requires a 1 time $4000 payment to the Recreation HOA plus yearly dues.

Report the one time payment and any additional monthly dues actually paid in 2022 as a Miscellaneous Expense, and just label that expense for what it is: HOA Fees.

[Eddie Glastname]

Purchased in May, available for rental in June, occupied in August.   

[Anonymous_]

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@Carl wrote:

Every new purchase of a house in this HOA area requires a 1 time $4000 payment to the Recreation HOA plus yearly dues.

Report the one time payment and any additional monthly dues actually paid in 2022 as a Miscellaneous Expense, and just label that expense for what it is: HOA Fees.

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If the one-time payment could be considered to be a capital contribution (which is common in many HOAs with amenities), then you most likely need to add the payment to your cost basis, @Eddie Glastname, rather than deduct the payment as an expense.