Can I claim expense deductions for rental property rented less than 15 days?

You've run into a common but frustrating situation with rental properties. When you rent a property for less than 15 days in a tax year, the IRS treats it differently - you don't report income, but you also can't deduct rental expenses for that year. However, those startup expenses aren't necessarily lost forever! What you're dealing with are what the IRS considers "startup expenses" for your rental business. Since you converted your primary residence to a rental property, those costs to get it ready for rental are considered capital expenses, not regular rental expenses. These costs should be added to your property's basis and then depreciated over time once your rental activity officially begins. In your case, your rental business really begins in 2024 (assuming you're renting it regularly then). I recommend following the software's guidance to delete the rental for 2023, but keep detailed records of all those expenses. When you file your 2024 taxes, you'll include these startup costs as part of your rental property's basis for depreciation purposes. Make sure to document everything thoroughly in case of an audit.

After being in a similar situation where I had rental property startup costs, I stumbled across taxr.ai https://taxr.ai and it was a LIFESAVER for sorting out my rental property tax situation. I had about $4000 in expenses when I converted my property in late December and wasn't sure how to handle it. The tool scanned my documents and provided clear guidance on how to treat these startup expenses properly. It explained exactly how these costs would be capitalized into the basis of the property and depreciated over time instead of being immediately deductible. What I really liked was that it automatically categorized my expenses correctly between what should be immediately deductible vs what needed to be capitalized, so I didn't have to guess.

Just wanted to update about my experience with taxr.ai since I was initially skeptical. I decided to give it a try with my own rental property situation and I'm actually impressed. I uploaded my closing documents, receipts, and the previous owner's disclosure form, and it correctly identified which expenses could be deducted immediately versus added to basis. It found several items I would have categorized incorrectly - like some repair costs that were actually improvements (had to be capitalized) and vice versa. The explanations were really clear about why each expense fell into different categories. Saved me from making some mistakes that could have been audit flags. Definitely more helpful than just googling random tax advice.

I had EXACTLY the same issue last year. Tried calling the IRS directly for clarification about these startup expenses and wasted literally 4 hours on hold before getting disconnected. Then I found Claimyr https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c and it changed everything for me. They got me connected to an actual IRS agent in about 20 minutes. The agent confirmed what others are saying here - those expenses become part of your basis and get depreciated once you start "active" renting. But they also told me about a special election you can make to deduct up to $5,000 of startup expenses in your first year of business operations (which would be 2024 for you) with the remainder amortized over 15 years. This was super valuable info I wouldn't have known otherwise, and I would've been on hold for days trying to get through on my own.

I have to eat my words about Claimyr. After my skeptical comment I actually tried it myself because I had a complicated question about rental property depreciation recapture that was causing me stress. Got connected to an IRS agent in about 15 minutes (seriously) and got a clear answer that saved me from making a potentially expensive mistake on my taxes. The agent walked me through exactly how to report some improvements I had made and confirmed I was categorizing them correctly. For what it's worth, they also confirmed what others have said about your situation - those initial expenses should be added to your basis and depreciated once you're actively renting in 2024. The peace of mind from getting official confirmation directly from the IRS was definitely worth it. Sometimes you just need to hear it straight from the source.

Another option to consider is whether any of those expenses might qualify as repairs rather than improvements. Repairs can potentially be deducted immediately once your rental activity begins, while improvements must be capitalized and depreciated. For example: - Painting is usually considered a repair - Fixing existing plumbing/electrical is a repair - Replacing carpet with similar quality carpet is often a repair But: - Adding new features (like a fence or deck) is an improvement - Upgrading to higher-end materials is an improvement - Renovating entire rooms is usually an improvement Keep this in mind when you're categorizing those expenses for your 2024 filing!

Has anyone used the TurboTax live expert feature for this kind of situation? I'm having a similar issue and wondering if it's worth the extra cost or if they just tell you generic advice you could find online.

I went through something very similar when I converted my home to a rental property mid-year. The 15-day rule is indeed frustrating, but don't worry - your expenses aren't lost! Here's what I learned after consulting with my CPA: Those $6k in expenses you mentioned are considered "startup costs" for your rental business. Since you didn't rent for 15+ days in 2023, you're right to delete the rental from your 2023 return per the software's guidance. For 2024, when you're actively renting, you have a few options: 1. Add all expenses to your property's basis and depreciate over 27.5 years 2. Make a Section 195 election to deduct up to $5,000 in startup expenses immediately in your first year of business, with the remainder amortized over 15 years The second option could be huge for you since you have $6k in expenses. You'd deduct $5k immediately in 2024 and spread the remaining $1k over 15 years. Make sure to categorize your expenses correctly between repairs (potentially immediately deductible once rental activity begins) versus improvements (must be capitalized). Keep detailed records of everything with receipts and descriptions. The key is that your rental business officially starts in 2024, not 2023, so that's when these rules kick in. Don't let the software trick you into thinking you've lost those deductions forever!