Tax Law (Questions About Taxes)/Schedule E

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Question
If I settle in December on a property I intend to rent after repairs are made in about 2 months, can I complete a schedule E for the property on my 2012 IRS return for closing and related expenses, even the house will not be ready to rent? I have other rentals, but never settled in a year that the property was not ready to rent.  Thank you very much.

Answer
Dear Herb,

Rental activities are passive activities (unless you are a real estate professional) i.e. all losses are postpone until you sell e real estate property and you get to offset the passive losses against any gain (if any) from the disposition of the property.

If you are a real estate professional (Internal Revenue Code) I.R.C Section 469(c)(7), then this is your business and the loss would be an active loss and you can take it in the year it was incurred.

I hope this answered your question, if I can be of any help please let me know.


Regards,
Abraham Itani, CPA

P.S. Please,rate my answer.  

Tax Law (Questions About Taxes)

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ABRAHAM ITANI, CPA

Expertise

TAX QUESTIONS DOMESTIC AND INTERNATIONAL OUTBOUND AND INBOUND. FBAR COMPLIANCE. CORPORATE, PERSONAL, PARTNERSHIP, PASS TROUGH ENTITIES, S-CORPORATION, LLC, TRUST, GIFT TAX, 1120, 1040, LATE FILING, NON FILING, AMT, FTC.

Experience

MORE THAN 10 YEARS OF STATE AUDIT TAXATION, MORE THAN 10 YEARS OF PRIVATE AND PUBLIC TAX EXPERIENCE WITH ITANI ACCOUNTING AND TAX, KPMG AND MNP. DEALING WITH HIGH NET WEALTH INDIVIDUALS, LARGE PARTNERSHIPS, EXPAT., CFC AND PFIC. DEALING WITH TAXING AUTHORITY ON ISSUES OF NON FILINGS AND LATE FILINGS.

Organizations
MEMBER OF AICPA, AND NJSCPA.

Education/Credentials
CERTIFIED PUBLIC ACCOUNTANT IN NEW JERSEY AND COLORADO.

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