Can I deduct utilities on property before it was rented--while I was rehabbing it?

elleyml — Sat, 01 Jun 2019 00:32:50 GMT

Inherited house in 2014. Tried to sell it but could not in the shape it was in. In 2015 I took out personal loan to fix it up. I worked on house all year--until November when I rented it out. Can I deduct utilities I paid while rehabbing/preparing home for rental?

You will need to add up all of the costs incurred to prep...

SusanH — Sat, 01 Jun 2019 00:32:52 GMT

You will need to add up all of the costs incurred to prepare the property for rental including utilities during that time. These costs will be added to the stepped-up basis on the date you inherited the property. The stepped-up basis is the Fair Market Value of the property at the time of the other person's passing.

Adding these costs to the original (stepped-up) basis will increase the amount of depreciation expense you have each year. You can start depreciating this property effective the day it was available for rent in 2015.

A Note about Depreciation

You being to claim depreciation when your property is placed in service; in this instance, it means when the property is ready to rent. You can depreciate the building and other improvements but not the land. The depreciation start date is not necessarily the date it is first used. If it is ready to rent on January 1st and you don’t find a tenant until February 15th you still get to start depreciating it on January 1st

topic Can I deduct utilities on property before it was rented--while I was rehabbing it? in Investors & landlords

Can I deduct utilities on property before it was rented--while I was rehabbing it?

You will need to add up all of the costs incurred to prep...