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Tax Law (Questions About Taxes)/Remodeled Rental Property


I purchased a house in October of 2014 and immediately began an extensive remodel of the interior of the home.  I finished the remodel and placed the property for rent in March of 2015.  This is the first and only rental property I currently own.

Do I claim any expenses for the property on my 2014 tax return?  My understanding is that I cannot claim any deductions or depreciation until the property is placed for rent, which would be March of 2015.  Do I simply keep all of my receipts and add all expenses prior to March 2015 to be included with the purchase cost as my basis in the property, and then begin depreciating it for tax year 2015?  I purchased and installed all new appliances, so am I correct in thinking that I just start depreciating those separately beginning with tax year 2015 since that's when they were placed in service, even though some were purchased in 2014?

Everything I did would be considered an improvement, not a repair or maintenance.  New flooring, kitchen cabinets, countertops, lighting, electrical devices, drywall, interior & exterior doors, base & case, plumbing fixtures, and paint.
The expenses I am most confused about are insurance, utilities, and mileage. I live 42 miles from the property and did almost all of the labor myself, so I've racked up a lot of mileage.

Thank you very much in advance for addressing my questions.  I've spent days pouring over IRS publications and the internet, but have been unable to find anything regarding my situation of spanning tax years before placing the property for rent.  Thank you!


Thanks for your question.

All of the improvements should be added to the cost basis of the house and depreciated. I would break it out into three categories 1) Land value, which is not depreciable; Cost of purchasing the house, which would be depreciated over 27.5 years; and Improvements to be depreciated over 27.5 years as well.

Appliances would be depreciated separately from the house itself, since they have a shorter life span. Use a five year life.

All of the other expenses that were incurred prior to the unit being placed into service are start-up costs. There is a limit on the amount of start-up expenses you are allowed to deduct the first year you are in business. Currently the limit has been $5,000. Any expenses in excess of the $5,000 should be amortized over 180 months.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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