Rental Property under construction

snathan99 · ‎March 24, 2025

I started constructing a rental property in 2024. Have taken a construction loan and paying interest into 2024. I may have also have additional draws in 2025. The construction continues into 2025 and the property will be placed in service in 2025. Do I have to specify anything on my Federal 2024 tax return about this property which is under construction? Or should I have to start reporting it (basis, income, expenses, etc.) starting in 2025? If I only start reporting in 2025, how do I report the interest payments made in 2024 and also the interest payments made in 2025, BEFORE the property was placed in service?

MinhT1

There is nothing to report in 2024. Just keep a record of interest paid to add it to the cost basis.

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MinhT1

Interest paid during construction of a rental home can be capitalized and added to the cost basis of the home. It cannot be deducted as a rental expense.

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snathan99

Thanks @MinhT1. Also, do I have to report anything in 2024?

MinhT1

There is nothing to report in 2024. Just keep a record of interest paid to add it to the cost basis.

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Rental Property under construction