Rental Property

[NotEasy]

A rental property was ready for rental starting 10/1/2007.

But there were still some minor repair works done in October and November.

Tenant finally was found and moved into the property on 12/1/2007.

Taxpayer (the landlord) claimed the property had always been ready to be occupied since 10/1/2007. Those repair works done in October and November were not critical. He did the works just because the property was still vacant as he was still looking for tenant at that time.

When would you start depreciating the rental property? 10/1/2007 or 12/1/2007? Thanks.

[jimmcg]

10/01/07, when "available for use"

[NotEasy]

Thank you.

[S T]

My Client

Oh how I wish that my t/p scenario were this easy, but noooo! They decided to remodel and it took them almost 1.5 years. All of 2007 and into 2008.

So I am still trying to make a conclusion as to the correct reporting.

It was a rental prior for several years, tenant moved out, and then the t/p decided to make improvements, such as HVAC, flooring, kitchen cabinets, move walls, etc. And they took their own "sweet time" in doing so.

It is still a rental, just not advertised during the remodel.

??

I am having diffiuclty in discerning how to handle

Sandy

[JG EA]

Sandy,
I hesitate to answer since I know you know.... but what I'd do: Still take normal stuff on the E (Interest, taxes, insurance etc.)

Since it was out of loop while remodeling, I'd save up all the renovation stuff and begin depreciating it when it is again available for rent. (Which should roughly correspond to the finish of the work.) If some appliances are just replacements I would depreciate them over their normal life but everything else I'd count as part of the renovation.

Unless we are talking about the place being wrecked and this just brought it back up to speed.

[S T]

Hesitate as well

JG, thanks for your viewpoints, found some of the same info on research and prior post.

Thanks for the "heads up" Still haven't decided what to do. It was and still is a rental, just that the owners (reported on LLC 1065 form) took their own sweet time in accomplishing these rennovations, adequate records.

It does make sense to report all normal expenses and delay the rennovation expense until 2008. Just hope I am not triggering any undo audit issues!

Sandy