Rental property question

[riched999]

Wayne County, Ohio

Sorry for cross-posting -- wasn't sure if it was best to post here or in the rental forum.

I have an investment property -- single family house for rent. At the end of 2003, tenants moved out. I decided I would try to sell the house, but my timing was bad -- big local manufacturer in town closed up and housing market tanked. After 6 months, I decided to go back to renting, but first I wanted to do a bunch of fix-up while the house was empty (replace carpets, kitchen and bathroom flooring, refinish hardwood floors, replace a bunch of wiring, replace basement windows, etc. I did this work myself over some time (I live in another state), so I didn't make the property available for rent again until Sept '05. New tenants moved in at the beginning of December.

I didn't claim expenses (utilities, property tax, insurance, repairs and improvements, travel expenses, depreciation, etc.) in 2004 because the property was not available for rent. I'm now preparing 2005 returns. I know how to deal with expenses incurred while the property was available for rent (Sept-Dec '05), but I'm not sure about expenses from 2004 or the first part of 2005. This house was not used as a home (no personal use) -- it is purely an investment property. These are all investment-related expenses.

Can I amortize these expenses? How where would I do this? Some of these expenses (new carpet, new basement windows) should probably be classified as improvements to be depreciated, no? Any comments greatly appreciated.

[JETX]

Your questions are NOT legal. Talk with your local CPA or tax preparer.

[LdiJ]

Originally Posted by riched999

Wayne County, Ohio

Sorry for cross-posting -- wasn't sure if it was best to post here or in the rental forum.

I have an investment property -- single family house for rent. At the end of 2003, tenants moved out. I decided I would try to sell the house, but my timing was bad -- big local manufacturer in town closed up and housing market tanked. After 6 months, I decided to go back to renting, but first I wanted to do a bunch of fix-up while the house was empty (replace carpets, kitchen and bathroom flooring, refinish hardwood floors, replace a bunch of wiring, replace basement windows, etc. I did this work myself over some time (I live in another state), so I didn't make the property available for rent again until Sept '05. New tenants moved in at the beginning of December.

I didn't claim expenses (utilities, property tax, insurance, repairs and improvements, travel expenses, depreciation, etc.) in 2004 because the property was not available for rent. I'm now preparing 2005 returns. I know how to deal with expenses incurred while the property was available for rent (Sept-Dec '05), but I'm not sure about expenses from 2004 or the first part of 2005. This house was not used as a home (no personal use) -- it is purely an investment property. These are all investment-related expenses.

Can I amortize these expenses? How where would I do this? Some of these expenses (new carpet, new basement windows) should probably be classified as improvements to be depreciated, no? Any comments greatly appreciated.

Anything that would be classified as a "repair" (ie refinishing the hardwood floors) would be expensed. Anything that would be classified as an "improvement" (ie replacing the basement windows) would add to your basis and would then be depreciated.