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February 15, 2022
Question

new rental property can I deduct insurance paid prior to closing

  • February 15, 2022
  • 1 reply
  • 0 views

I purchased a new rental property in fall 2021. I had to provide proof of insurance prior to closing, so it was paid before I owned the house. We spent a few days cleaning, etc. prior to offering it for rent (if that makes a difference?). Can I deduct the insurance as an expense? Or add it to the basis? Thanks for the help.

1 reply

February 15, 2022

Prorate the insurance cost by month and claim the amount that corresponds to the months after the property was made available to rent.  This amount would be entered as a rental expense.

 

The portion of the premium that covered the property before it was made available to rent would be a personal expense and is not deductible or added to your basis.

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February 16, 2022

Thank you! On a related note, can travel costs associated with going to the closing in person (we flew) be added to the basis? Thanks.