Where do I deduct inspection fee for a rental property?

[burgerguy14]

The inspection was done prior to the purchase of the home.

[Anonymous_]

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@burgerguy14 wrote:

The inspection was done prior to the purchase of the home.

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Then add the cost of the inspection to your basis for depreciation.

[burgerguy14]

Is there a way to take it as a current expense so I don't have to depreciate it? 

[Anonymous_]

Yes, if the property had been placed in service at the time of the inspection.

[burgerguy14]

The property was placed into service 3 months after inspection.  Does that qualify as the "same time"?   

[DoninGA]

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@burgerguy14 wrote:

The property was placed into service 3 months after inspection.  Does that qualify as the "same time"?   

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If you paid for the inspection before you were the legal owner of the property then it cannot be entered as a rental property expense.  It has to be included in the basis of the property as previously stated.

[burgerguy14]

Ok that makes sense.

How about Bank required appraisal fees and credit reports.  These were done prior to me being the legal owner.   These cannot be added to basis. Can I deduct them as start up expenses?

IRS 527 says:

The following are settlement fees and closing costs you can’t include in your basis in the property.

1. Fire insurance premiums.

2. Rent or other charges relating to occupancy of the property before closing.

3. Charges connected with getting or refinancing a loan, such as:

a. Points (discount points, loan origination fees),

b. Loan assumption fees,

c. Cost of a credit report, and

d. Fees for an appraisal required by a lender.

[DoninGA]

@burgerguy14 Only loan interest and real estate taxes are deductible closing costs for a rental property. Other settlement fees and closing costs for buying the property become additions to your basis in the property.

[DoninGA]

@burgerguy14 Go to this IRS website for specific information on deductible closing costs on a rental property - https://www.irs.gov/faqs/sale-or-trade-of-business-depreciation-rentals/rental-expenses/rental-expen...