Rental Expenses

3 replies
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I have a client who purchased a house in 2018 to renovate and rent as an Airbnb. The renovation took place in 2021 and has repairs and expenses. It won't be available for rent until 2023. My question is can you file a sch E for 2021 taxes to claim expenses even though it won't be available for rent until 2023?

ProSeries Basic

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Camp1040Answer

Level 10

If it is not placed in service then no Schedule E for 2021. The expense of renovation can be added to the basis of the property for deducting depreciation in 2023.

Taxes and interest can be deducted on schedule A if the client qualifies.

Camp1040Answer

Level 10

If it is not placed in service then no Schedule E for 2021. The expense of renovation can be added to the basis of the property for deducting depreciation in 2023.

Taxes and interest can be deducted on schedule A if the client qualifies.

T

TaxGuyBill

It is a bit odd that the renovation didn't happen until 3 years after it was purchased, but I'm really curious about 2022. If the renovation took place in 2021, why isn't it available for rent until 2023?

S

SKC2021Author

Level 3

They lived in Texas and moved to WV the first part of last year(2021). That is when they started on the renovation per receipts he brought me for 2021. When he brought me the tax papers he said it wouldn’t be ready to rent until next year(2023). Renovation must have continued in 2022 since it wasn’t ready for rent in 2022.

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