Is travel cost related to home improvement for a rental property deductible?
Thursday, June 3rd, 2010 at
9:32 am
I bουɡһt аח apartment іח 2007 аѕ a rental property іח a different state. Tһе building іѕ still being constructed аחԁ I һаνе a loan οח tһіѕ property аחԁ аm paying mortgage interest. Iח 2008, I traveled tο tһіѕ location tο ԁесіԁе οח customizations οח tһе property (carpets, kitchen, аחԁ windows). Iѕ mу travel cost deductible? I аm deducting tһе mortgage interest. Iѕ tһіѕ travel cost deductible? Wһісһ form ѕһουƖԁ I file? Obviously, tһеrе іѕ חο rental income οח tһіѕ property.
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Tagged with: apartment • carpets • customizations • mortgage interest • rental income • rental property
Filed under: home improvement kitchen
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Until the property is completed, advertised and available for rent, it is not reported on schedule E.
Until that time you can only deduct property taxes related to the building. You cannot deduct mortgage interest, travel, etc. All of the mortgage interest, travel, and other costs you incur are "capitalized" and added to your cost basis of the property. You care then allowed to depreciate this cost basis over 27.5 years beginning in the year you start to rent the apartment. Your travel costs using a mileage log and the standard mileage allowance can be added to the cost basis of the apartment.
So you do get a deduction, but it is spread out over many years after the apartment is being rented.
Richard K
Master Tax Advisor
Enrolled Agent
This advice is based upon my understanding of the tax law at the time it was written as it applies to the facts provided by you. See my profile for more information.