Rental Property Renovations

[mp_fuel]

Can we deduct improvements (cost of renovating each unit) to a rental property in one year (2022) before we begin renting it out in the next year (2023)?

[jkellett2]

The cost of improvements to the rental property would be included in the cost basis in the property.  This will be the amount you will depreciate for that property.  For example, if you originally paid $200,000 for the property and made improvements totalling $30,000 to the property prior to placing it in service for rental, the cost basis would then be $230,000.

You would begin depreciating the property when you put it into rental service in 2023.  You would not report it on your 2022 tax return.