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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 6217
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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In 2008, I changed my primary residence, and began finishing

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In 2008, I changed my primary residence, and began finishing the basement of my old house, with the intent of renting the home. In June 2009, I completed finishing the basement, and listed my old house as available for rent. In late July 2009, I began collecting rent for my old house, and stopped paying the utilities. Am I able to deduct utilities for any period of 2009? What about monthly HOA dues, and/or costs to finish the basement?

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Stephen E. Grizey :

Are you talking about doing a tax return for 2009?

Customer:

YES

Stephen E. Grizey :

Well, basically all costs related to the remodeling of your house prior to rental would be capitalized and added to your cost of the property would you would then depreciate over 27 1/2 years beginning when you placed your house in service and it became available for rent.

Stephen E. Grizey :

Then any other ongoing costs would be deductible as rental expense.

Customer:

so are you saying HOA fees & utilities count as cost of remodeling?

Stephen E. Grizey :

When you figure the depreciation, you would have to allocate the cost between land and building, usually based upon the percentages in the real estate tax assessments, as the land isn't depreciable.

Stephen E. Grizey :

All expenses during the construction period should be capitalized as part of the project.

Customer:

Cool. Lastly, any advice for getting a revised 2009 return accepted by IRS before it's too late, i.e. if I'm running late, can I Fedex (or USPS overnight) by April 16, 2012 and that will be good enough?

Stephen E. Grizey :

The statute of limitations on the 2009 tax year doesn't expire until 4/15/2013, assuming you filed a return for 2009, and are talking about filing a 1040X for 2009. For future reference, it isn't when the IRS gets it, its when you mail it that counts to determination timely filing.

Customer:

k, thanks

Stephen E. Grizey :

U R Welcome

Stephen E. Grizey :

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Customer:

i will : )

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