ScenarioI purchase a property in October of 2022 for the purposes of renting it.I spend quite a few months fixing/rehabbing it and making it suitable for rentersIt is made available for rent in March of 2023It is leased up in May of 2023 so the property has had no actual rental income for 2022 because it was being rehabbed..For the purchase, and during my time holding it for the last few months of 2022 I paid mortgage interest, origination points on the loan, home owner taxes, utilities, etc.Question:When can I claim the expense / deductions for the funds spent in 2022 to acquire and hold the rental property while it was being rehabbed for rent? Do I take those deductions when I file my 2022 taxes or do I take those deductions when I file my 2023 tax return since the property was not put "in service" until 2023 even though I purchased it and had expenses in 2022?

TurboTax

File with experts
File your taxes
Experts at your fingertips

An expert helps with your taxes, or does them for you
TurboTax Expert Full Service

TurboTax Expert Assist

TurboTax Self-Employed
Prior year taxes
File myself
File myself
Do it yourself

We'll guide you step-by-step
TurboTax Do It Yourself

TurboTax Self-Employed

TurboTax Desktop
TurboTax Free

Activate your product

Prior year taxes
Business
Business
Business taxes

Get your T2 corporate return done right, your way
TurboTax Business

TurboTax Business Desktop
Tax situations
Tax situations
Tax situations

Find extra guidance for your big life moves
For investors

For 25 and younger

For self-employed

For new to Canada

For life changes
Resources
Resources
Resources

Explore tax tools, get tips, and read reviews
Personal income tax calculator

RRSP savings calculator

Learning hub

TurboTax support (FAQ)

TurboTax community
Pricing

curioustaxpayer

Level 2

Solved

When do i take the deduction?

Forum|Forum|2 years ago
September 11, 2023
1 reply
7 views

Scenario

I purchase a property in October of 2022 for the purposes of renting it.
I spend quite a few months fixing/rehabbing it and making it suitable for renters
It is made available for rent in March of 2023
It is leased up in May of 2023 so the property has had no actual rental income for 2022 because it was being rehabbed..
For the purchase, and during my time holding it for the last few months of 2022 I paid mortgage interest, origination points on the loan, home owner taxes, utilities, etc.

Question:

When can I claim the expense / deductions for the funds spent in 2022 to acquire and hold the rental property while it was being rehabbed for rent? Do I take those deductions when I file my 2022 taxes or do I take those deductions when I file my 2023 tax return since the property was not put "in service" until 2023 even though I purchased it and had expenses in 2022?

Not A Product Question

Best answer by Critter-3

Expert Reviewed

You can't deduct typical rental real estate expenses (utilities, repairs, etc.) until the property is placed in service as a rental HOWEVER these expenses can be CAPITALIZED if you make a timely election.

Anonymous_

Level 15

You can't deduct typical rental real estate expenses (utilities, repairs, etc.) until the property is placed in service as a rental.

You can add improvements to your basis for depreciation and you can also deduct mortgage interest and property taxes on Schedule A (both are subject to limitations).