Best tax strategy for first year rental property with no income yet

[bimbettocavallo]

We bought a property (located in UK) towards the end of the year with the intent of using it as a vacation rental (i.e. Airbnb).
We obviously spent money to buy the property and renovate it. All this will be part of the costs basis.

The property was available for rent from mid-November but we didn't get any income before the end of the year. In the meantime we incurred a bunch of expenses: mortgage interests, bills, more repairs, cleaning, etc.
Since we generated zero income (and even worse, we had no guests) I believe we won't be able to report a loss that can offset other income (for instance W2). Is this correct?
And if so, what is the best way to handle the situation?

* Can I carry the losses forward to next year?
* Is it just better to say that the property was not available yet for rent and start deductions next year? I think in this cases I would lose most of the running costs like bills and cleaning, although some of the repairs could be capitalized

[Anonymous_]

Are you providing substantial services to your renters?

See https://www.irs.gov/instructions/i1040se#en_US_2023_publink24332td0e1069

[Anonymous_]

Otherwise, if you have made the property available for rent, you can deduct typical rental real estate expenses in the tax year in which those expenses are incurred and paid.

[bimbettocavallo]

Hi, thanks for the reply.

I would argue that we supply substantial services (on call support, cleaning, hot tub, spa service, etc...).

If I do deduct the expenses, it will result in a loss. Can that loss be used against, say, a W2 income?

[Anonymous_]

Yes, if you provide substantial services to your renters (as you indicated) then you should be reporting income and expenses on Schedule C.

If you have a net Schedule C loss, you can use that loss to offset all other types of income.