Placed Into Service Date - Repairs Vs. Capitalized Exp
I understand that once your rental is "placed into service" repairs may be expensed in the year incurred rather than capitalized and depreciated.
However, when does the "placed in service date start"? Can I advertise the prop as a rental, and during that period, but before I have an actual tentant and signed lease make repairs (like replace broken toilet, or broken window) and expense them right away? (Assuming I just purchased the property to be used as a rental)
Any guidance/reccomendations would be appreciated.
Thanks,
Adam
Property is considered placed in service in a rental activity when it is ready and available for a specific use in that activity. You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent.
You can begin to depreciate rental property when it is ready and available for rent.
Just this morning I was reading the public notices in the paper, the city condemened several properties that I know are currently being rented out.
Last week I went to look at a couple properties, they were horrible, I mean really bad. I normally walk through a rough place and get excited thinking of how to fix what. All I could think on these was to gut them to the studs and start from scratch. The owner was actually living in one and thought the other was ready to rent as it sat.
Serviceable seems to be a matter of perspective. If it was me, based on what you describe, I would call it in service immediately. But, there are more knowledgeable people who will have a better legal opinion, IE DaveT.
My area is a hot rental market, I never advertise, and have a waiting list of people. My last 2 houses I showed to perspective renters as soon as I bought them. They were ugly for sure, but I rented both on the first showing, at a prorated price based on current condition with an agreed upon move in date and price adjustment. Holding fee, rent, matter of opinion, I like rent.
Mykle