When can I deduct a property management fee paid in a year prior to the house being listed?

[nothingsknower]

I'm confused about how to handle a payment to a property manager. Based on other reading and questions I've asked, you cannot deduct expenses related to your house until the house is "listed and available for rent". We made a payment to a property manager to begin managing, repairing, and renting the house in December 2017, but with repairs happening first, she didn't actually list the house until early January. Can I deduct the payment made to her, and if so, do I deduct for 2017 or 2018? Or does the fact that it wasn't listed until January mean nothing is deductible? Also, payments to her ARE deductible, would that mean any other minor repair expenses made after her service was acquired may also be as well? 

[DS30 · Accepted solution]

Based on your situation, you will not be able to claim any rental expenses in 2017 if the rental property was not actually available for rent until 2018. However, if you have repair expenses in 2017 that can be considered capital improvements, then you can add these improvement costs to the basis in the house (which in turn will increase your annual depreciation expense on your rental property).

A "capital improvement" to your home, meaning the improvement must increase your home's value, adapt it to new uses, or extend its life. Examples of capital improvements are: adding a third bedroom, adding a garage, installing insulation, landscaping and more.

As for management fees, if you paid them in 2017 and the property was not available for renting until January 2018 then the IRS will consider these nondeductible personal expenses.

After the home is available for renting, you will be able to deduct all management fees and repairs as rental expenses.

Here is a link that can provide you with helpful information related to your rental property 

TurboTax - Tips on Real Estate Taxes and Real Property