Expenses for acquiring rental property - Help

[thomtax]

Client made two trips to another state to look at properties for suitability and one trip for closing on the property decided upon. I have looked at TTB and as I understand the explanations, the start up cost for rental property is the same rules as for business start up costs. On page 8-17 it states:

Start-up costs include:
Analysis or survey of potential markets, products, labor supply, transportation facilities, etc.
Expenses incurred while investigating the purchase of a business.

Also on the same page it shows that the 2011 Start up costs limit is $5,000.

Am I understanding correctly that the expenses are deductible as start up costs? Do I put this on Schedule E and list as start up costs?

Thanks for any and all guidance.

LT

[taxea]

You could or as travel expense if the Sch E has income.

[ChEAr$]

You could or as travel expense if the Sch E has income.

oh now, I don't think so. These expenses are incurred/paid before rental begins, and hence fall into the category of capital expenditures. So, either add to basis or property, or, if permitted as OP has found, amortize separately and/or deduct as allowed.

They have nothing to do with rental after acquisition or while rented thereafter.

[thomtax]

Thanks for the replies.

Please tell me if I am wrong, but the way it looks to me is that they could also take per diem for this.

LT

[Gretel]

If you mean per diem for meals, yes.