Taxes for Investment Property

[david867]

I am finishing up my 2022 taxes and not sure how to handle taxes and deductions for an investment property. We purchased a property in September of 2022 and remodeled it for resale in both 2022 and 2023. The house is currently on the market for sale, but due to a slower market, we may end up renting it out instead.

Do I need to include anything for this property in my 2022 taxes? Or would I just capitalize all expenses (remodel and holding costs) once we either rent it or sell it in 2023?

Thanks!

[Anonymous_ · Accepted solution]

If you purchased the property intending to rent it, then you can capitalize your renovation costs until such time as you make the property available for rent.

When (if) the property is placed in service as a rental, you can deduct typical rental expenses, such as utilities, minor repairs, maintenance, et al., on Schedule E of your 1040.

[david867]

Thanks for your response. And if we do end up selling it, I assume we could capitalize the costs on our 23 taxes as well?

[Anonymous_]

Yes, add to basis.