topic Purchased rental prop, remodeled it. Didn't incur 2016 rental income. Can I enter the prop in 2017 taxes so I can apply the 2016 expenses against the 2017 rental income? in Investors & landlords

Purchased rental prop, remodeled it. Didn't incur 2016 rental income. Can I enter the prop in 2017 taxes so I can apply the 2016 expenses against the 2017 rental income?

pat-rinaldi — Tue, 04 Jun 2019 20:41:00 GMT

I purchased a rental property in 2016. Incurred remodeling expenses in 2016, but didn't receive rental income in 2016. Can I enter the purchase and expenses in my taxes for 2017 so that I apply it to the rental income from 2017? Does Safe Harbor Rule come in to play and why?

When you have just bought a rental property, any work you...

view2 — Tue, 04 Jun 2019 20:41:02 GMT

When you have just bought a rental property, any work you do to get the property ready for renting is classed by IRD as capital improvement, and is not fully deductible. You have to add the costs to the original purchase price, and depreciate the total (purchase price + improvement cost) [separate land value ,land is not depreciated]over the life of the property (from the date placed in service (ready to rent).

You can start 01/01/2017 as placed in service if ready to rent on that date.