Hired a contractor to replace a room in a rental property. He botched the job and had to fire him and I'm starting over.

[PaulR1]

Hi, I hired a contractor who is basically an incompetent scammer for a project on my rental property.  I paid him $23,000 for basically nothing. I have to start the project over with a new contractor (replacing a wrecked sunroom with a real room.) How can I write this off when the room was not completed last year?

[Mike9241]

You would take a write-off on schedule E - misc deduction - something like "remodeling expense never completed" or "loss on abandoned project"  or your own designation. if you ask would this be a red flag for audit. Possibly. 

[PaulR1]

Thanks Mike.  I am trying to restart the project this year with a new contractor.

Should I just wait for next year when hopefully the project is done and write the whole thing off?

Or should I try to write off the mostly wasted money I already spent last year?

This whole fiasco is very disheartening.

[DianeW777]

It depends.  As stated by Mike9241, you should deduct any money spent that is completely worthless and you can use the miscellaneous deduction or repairs deduction. Be prepared with your receipts and backup detail should you need it for the IRS.

If you have amounts spent in 2023 that will actually be part of the structure when completed, those amounts should be contained until you have a full cost of the capital improvement for next year when complete. In other words any part of the work that is complete and will be part of the new structure/capital improvement.

@PaulR1