Tax Law (Questions About Taxes)/Cost basis

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QUESTION: Hello, I think you helped me a looong time ago - 7 or 8 years perhaps.

I bought the other half of our 100 year old duplex in December of 2012. I had to make a lot of improvements before I could rent it on Oct 1, 2014.  I know my construction and material costs are added to the basis, but how do I report the property tax, interest, utilities, and insurance expenses while the house was being made ready to rent?
(one unit was rented on 10/1/2013 and the other on 1/1/2014)
This property is in Lancaster, Pa.
Thanks for help.

ANSWER: Hi
You can deduct them currently. Deminimus.

You don't start depreciation until unit is available for occupancy - not actually occupied but when it could have been rented

Curious if you are close to or exceeding loss limitations on agi.

if your agi over 125k, you start to limit passive rental losses - you don't lose them just suspended.



---------- FOLLOW-UP ----------

QUESTION: Thank you. My agi is well under $125K, so I will not worry about any losses being suspended.

A follow question, if I may. In completing the 2 units, I purchased 8 appliances (2 ranges, 2 refridgerators, 1 dishwasher, 1 microwave, 1 washer and 1 dryer) for a total cost of about $3,300. A few pieces were used.  Am I correct that these items are to be depreciated over 5 years? Can I include them on one form 4562, or should I complete separate forms? FYI, I am using TaxAct.
I know any information I receive is provided solely for educational and informational purposes only. But, I will still write a good review!
Thanks for the help.
Herb High

Answer
sorry. i have been busy and forgot about this.. did you file ? (if you need, file an amended to fix if you dont do the following)

you can deduct all current expenses in year incurred. the only thing you cant take is depreciation until the property is _available_ for rent.  which is "placed in service"  

yes you can (and should) depreciate the fixed assets - ranges ,etc.

also, keep copious records.  for some reason, rental property is a bane for the irs and they love to audit it..

if you want to chat by phone, make a new inquiry MARK IT PRIVATE and include your phone number using the code BLACK HORSE as the key for 12345 ...  for example 253 is LKA use the E at the end for zero

Patrick

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