Can I deduct rental property repair expenses before it was officially placed in service?

The answer is yes, but with some important nuances. Expenses incurred to get a property ready for rental are generally deductible, but how you deduct them depends on their nature. What you're describing sounds like "make-ready" expenses. If they're ordinary repairs (fixing existing features rather than improvements), you can typically deduct them in the year paid, even if that's before the official "in-service" date. Things like fixing plumbing, patching roof leaks, and general maintenance fall into this category. However, if any of those expenses were for capital improvements (like completely replacing the roof rather than patching it, adding new features, or significantly upgrading existing ones), those would need to be depreciated over time rather than deducted immediately. The key is that you had the clear intent to rent the property when making these repairs. The fact that you did ultimately place it in service within the same tax year strengthens your position.

I was in a similar situation last year with a property I inherited that needed work. I was confused about which expenses could be deducted when and spent hours trying to figure out IRS rules. Then I discovered https://taxr.ai and it honestly saved me so much headache. I uploaded my repair receipts and property documents, and the AI analyzed everything and clearly separated what was immediately deductible versus what needed to be depreciated. It even explained the reasoning behind each categorization so I understood the rules better. The best part was that it found several deductions I would have missed - like some travel expenses related to property management and certain fees I didn't realize were deductible.

Just wanted to follow up - I ended up trying taxr.ai after my skeptical questions. I uploaded all my docs for my two rental properties and I'm shocked at how well it worked! It correctly identified that my HVAC replacement needed to be depreciated but the duct work repairs could be fully deducted. It also pointed out that I could deduct the mileage for all my trips to my rental properties for showings and repairs, which I had no idea about. Honestly think it's going to save me at least $3,500 in taxes this year that I would have missed. Worth checking out if you're doing rentals.

If you're dealing with IRS questions about your rental property, you might want to just ask them directly. I had similar questions about repairs vs. improvements on my rental and needed to sort it out quickly. After trying to call the IRS for days with no luck (always "call volume too high"), I found this service called Claimyr at https://claimyr.com that got me through to an actual IRS agent in about 20 minutes. I was able to explain my specific rental property repair situation and get a clear answer directly from them, which honestly gave me more confidence than trying to interpret the rules myself. They have a demo video at https://youtu.be/_kiP6q8DX5c that shows how it works. Having that official IRS guidance on my specific situation was really reassuring.

I owe everyone an apology. After being pretty dismissive about that Claimyr service, I actually tried it yesterday because I was desperate to get an answer about my rental property depreciation before filing. After trying to call the IRS myself 4 times over 2 weeks (and never getting through), the service had me talking to a real IRS agent in 23 minutes. The agent was super helpful and confirmed I could deduct my pre-rental repairs since they were ordinary maintenance and not capital improvements. She even emailed me the specific publication section that covered my situation. Definitely changed my mind about the service - sometimes it's worth paying to save yourself days of frustration.

Something else to consider - if the repairs were substantial, you need to be careful about the difference between repairs and improvements. Repairs maintain the property and are deductible in the year paid. Improvements add value or extend the useful life and must be depreciated over 27.5 years. For example: - Fixing a leaky pipe = repair (deduct immediately) - Installing new plumbing throughout = improvement (depreciate) - Patching holes in roof = repair - Replacing entire roof = improvement The IRS looks at this closely for rentals, so make sure you categorize correctly!

Don't forget to check if you qualify for the Section 199A deduction for your rental income! It can give you up to a 20% deduction on your qualified business income from the rental if you meet the requirements. It's often overlooked by rental property owners.

Great question! You're dealing with what's called "pre-rental" expenses, and the good news is that most of what you described should be deductible. Since you inherited the property in January and placed it in service in October of the same year, with clear intent to rent it out, those repair expenses should qualify for deduction. The key distinction is that repairs like fixing plumbing, patching roof leaks, and general maintenance are typically deductible in the year paid, even if done before officially renting. However, that water heater replacement would likely be considered a capital improvement that needs to be depreciated over 27.5 years (unless it qualifies for the de minimis safe harbor if under $2,500). Make sure to keep detailed records showing your rental intent from the beginning - any correspondence with contractors, rental market research, listing attempts, etc. This documentation will support your position if the IRS ever questions the timing of these deductions. Also consider whether you might qualify for Section 199A deductions on your rental income once you start receiving it - it's worth looking into for additional tax savings!

Just to add another perspective from someone who's been through multiple property acquisitions - timing documentation is absolutely crucial for pre-rental expenses. I learned this the hard way when the IRS audited one of my rental properties a few years back. Beyond what others have mentioned, I'd also suggest documenting any property inspections you had done, communications with property management companies (even if you didn't hire them), and any advertisements or listings you may have posted. The IRS wants to see a clear "business purpose" timeline. One thing that really helped me was creating a simple spreadsheet tracking all expenses by category (repairs vs. improvements) with dates and descriptions. It made tax prep so much easier and showed the IRS I was treating this as a legitimate business from day one. Also worth noting - if you did any work yourself on the property, you can't deduct your own labor, but you can deduct materials and any tools you purchased specifically for the rental property work.