First year Rental

[monicac]

If a client does work on a residence they are going to rent out but they have not yet found a renter but had expenses with no days rented in 2020 how do you record the loss when you can't use a  Sch E because it was not rented for 15 days or more?

[qbteachmt]

"Does Work" and "but had expenses with no days rented" don't really mean the same thing.

If the property was not available for rent, it isn't really "in use" yet.

"Does Work" means, what to you: Improvements?

[TaxGuyBill]

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@monicac wrote:

If a client does work on a residence they are going to rent out

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By "residence", you mean it was used for personal use, right?

It the property being converted to 100% rental (for a year or more), or is it still going to be used as personal use?

[monicac]

They spent 2 months making improvements then put it up for rent but did not get someone into it before year end.

[monicac]

It is being converted to 100% rental. 

[TaxGuyBill · Accepted solution]

If it is being converted to 100% rental, the "placed in service" date is when it is advertised, ready, and available to be rented and you need to enter ZERO personal days.

Expenses after that date go on Schedule E as deductions, expenses before that date are usually capitalized and become part of the Basis for depreciation.

It is was "placed in service" in 2020, you enter ZERO personal days.  With zero personal days, the program should not give you any problems with zero rental days.  Manually prorate annual expenses such as mortgage interest, real estate taxes and insurance based on the "placed in service" date..

[monicac]

Thanks for your great explanation! 😊