Staging Expenses For Rental Property Sale

[TomJ]

Client sold rental property in Jan 2022. Incurred staging expenses from July-Dec of 2021, paid monthly in 2021. Are these expenses deductible on Sch E as rental expenses for 2021 (seems like a stretch that staging for sale would be a rental expense), or are they selling expenses (like closing costs) in 2022, even though they were paid in 2021? Or neither? I lean toward selling expenses in 2022, but crossing the tax year for a cash basis taxpayer gives me pause.

Thanks in advance for your thoughts.

Tom

[ATSMAN]

I have done this before with another client but it was when they put the apartment on sale and we booked it as part of the selling expense so it added to basis.

[kathyc2]

It wouldn't be rental expense. The point of staging is to sell at a higher price or more quickly. I would add to basis same as you would if they would have changed out appliances for a higher price or quicker sale.