ANOTHER RENTAL REMODEL QUESTION

Forum|Forum|3 years ago
April 16, 2023
1 reply
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I started a rental remodel in August 2022. Spent $50K in 2022. Finished remodel Feb 2023.
I believe my 2022 expenses are deductible in 2022.
Where do I enter them my 2022 expenses?
....Under RENTAL SUMMARY -> ASSETTS/DEPRECIATION? And then do I 'Add an Asset'?
....And then enter it under 1) Land improvement? 2) Real Estate property? or 3) Rental Property appliances...?
Or, am I totally lost and on the wrong track?
I am so confused....
I have 1 house rented by a family member so this is major business for me.

Vanessa A

If you spent $50k on a remodel, this would not be deductible in 2022, it would be capitalized and added to the cost basis of the house and depreciated over time. You are correct that it will be entered under assets and then it will go under Real Estate Property.

If this property is rented by a family member, is it at fair value? If not, then you can only deduct expenses up to the amount of rental income you receive. If so, then you would treat it as a regular rental property.

Any expenses you incurred in 2023, will not be part of your 2022 return.

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