renovation expenses incurred over 2 years

Forum|Forum|6 years ago
April 15, 2020
1 reply
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Renovations on my rental property extended from fall 2019 to spring 2020; expenses were incurred over both years; in service date is in Spring 2020. What do I do with the renovation costs for 2019 on the 2019 return, then? What would be the date "purchased or acquired"? How can I give an "in service" date after the 2019 tax year? Thanks!

Carl

Level 11

Your renovation costs are property improvements. But I think you already know that. They will *NOT* be entered anywhere on your tax return until the tax year you place them "in service". It does not matter in what tax year the expense was incurred either. Depreciation does not start until the tax year they are place "in service".

Since that did not occur in 2019, nothing concerning this will be entered on your 2019 return anywhere. You'll deal with it on the 2020 return next year, assuming you actually place the assets "in service" in 2020. Depreciation will start on the date place in service, regardless of the date the work was done, or the date you paid for it.

So if placed "in service" in 2020, then next year when completing your 2020 tax return you'll list those renovations/property improvements in the assets/depreciation section.