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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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I have a rental property that we didnt rent out in ...

Customer Question

I have a rental property that we didn''t rent out in 2007. We spent the whole year on rentovation and updating, because we want to sell the property and nolonger rent. My question is how do I list this property on my taxes. We still have all the yearly expenses ie. property tax, insurance, supplies, repairs, depreation etc., but I didn''t make any income from the property. I do my taxes online through taxact.com, but I''m at a loss as to whether I can make these claims on my income tax returns for 2007 when I didn''t generate any income from it, and then turn around in a couple of months sell the property and take another claim against the profits using essentially the same information.
Submitted: 9 years ago.
Category: Tax
Expert:  Jon Andrews replied 9 years ago.

When you spend money renovating a property it is EITHER an expense item or a capital item. If it is a capital item, you add it to your cost (and deduct it against the sales price when you sell it). If it is an expense item, you deduct it when you pay it but NOT when you sell the property.

As to your primary question, as long as the property was held "for rent", then you should be able to deduct your expenses even with no income.

jon

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Customer: replied 9 years ago.
Reply to Jon Andrews's Post: I think I have a better understanding now. So if I'm understanding you right, all the expenses incurred during 2007, ie. miliage traveling back and forth (2hour drive)to make the renovations, utilities needed to preform work on the property, and supplies are all deductable on my tax returns as well as insurance, property tax and so forth. The improvement expenses should be deducted against the profits made from the future sell of the house if I'm correct. Thanks, XXXXX XXXXX
Expert:  Jon Andrews replied 9 years ago.

That is correct

jon