Rental property question

[spiegmaster]

I have an LLC registered in KS that i bought in Oct 2021 and have an rental property under the LLC. There is no rental income for this property in 2022 , and i have incurred over $4k in rennovation expenses. Two questions: 1) Since i did not have rental income in 2022, should i file returns?

2) Can i claim deduction on rental income loss(since i had a rental agreement to get 5k$/month in rental income)

3) Can i claim expenses as deduction?

Thanks,

[DavidD66 · Accepted solution]

If you previously rented the property and removed it from service to do the renovations, you can deduct the expenses related to the property.  If the property had not been placed in service, the expenses are not deductible as rental expenses.  Also, if you bought the property and then renovated to rent, then you would add the renovation costs to your cost basis of the property when you place it in service.  If it was previously a rental, you would add the renovation costs as a separate asset.   The rental agreement has no bearing until the property is "available" to be rented.  

[spiegmaster]

Thanks for the reply! To clarify , the property was available to be rented, and the renter used the property until May 2022. but the renter did not pay the rent and i evicted him from the property in May 2022.

So clarifying if i can claim 5 months of rental income loss? We have the eviction notice etc.

Also, just to confirm that i can claim the 2022 renovation expense on the property after the renter was evicted?

Thanks again for your reply in advance.

[DawnC]

No, you cannot claim a loss for unpaid rent; you just don't report any income.   But you can claim the renovation expense.   Some items are expensed, and some are capitalized and depreciated.  

Rental Expenses

Capital Improvements to be depreciated