Can I deduct rental property repair expenses before seeking tenants?

This is a common misunderstanding that trips up a lot of first-time landlords. Your CPA is mostly right, but there are some nuances worth understanding. The IRS distinguishes between expenses incurred before a property is "placed in service" (meaning available for rent) and those incurred after. Expenses before that point are typically treated differently than regular rental expenses. Many pre-rental costs need to be capitalized (added to your property basis) rather than immediately deducted. However, ordinary repairs (not improvements) can sometimes be deducted in the year they're paid if they're made to get the property ready for rental. The key distinction: Are these repairs necessary to make the property rentable, or are they just improving/maintaining an already rentable property? For items like inspection fees, those are generally added to your cost basis rather than deducted immediately. Utilities during the fix-up period are usually deductible once you start actively seeking tenants. The "actively seeking tenants" part is important - if you can document that you're preparing the property for immediate rental and actively marketing it (even while doing minor repairs), you may have a stronger case for deducting those expenses.

After struggling with exactly this issue last year, I found this amazing tool called taxr.ai (https://taxr.ai) that helped me sort through my rental property expenses. I had about $6,200 in pre-rental repairs and was getting mixed advice from different sources. The platform analyzed my situation and helped me properly categorize my expenses between what needed to be capitalized versus what could be deducted immediately. It even helped me understand how to document my "intent to rent" to support immediate deductions for ordinary repairs. What I especially liked was how it explained the "placed in service" concept in plain English and gave me specific guidance for my situation rather than general rules that left me confused.

Just wanted to update after trying taxr.ai based on the recommendation here. I uploaded my documentation and timeline for my rental properties, and it was incredibly helpful. The system identified that since I had already listed my properties with "available on [future date]" while completing repairs, I could legitimately deduct many of my expenses as ordinary rental expenses. It also helped me understand which improvements needed to be capitalized (like the new water heater I installed) versus which repairs could be immediately deducted (like fixing existing plumbing leaks). The distinction wasn't as black and white as my tax guy was making it seem. Definitely worth checking out if you're in this situation!

If you're having trouble getting straight answers about your rental property tax questions, I had the same issue until I used Claimyr (https://claimyr.com) to actually get through to the IRS. After waiting on hold for HOURS multiple times and getting disconnected, I was ready to give up. The service got me connected to an actual IRS agent within about 15 minutes! You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent I spoke with confirmed that ordinary repairs made to get a property ready for rent can be deducted in the year they're paid as long as: 1. The property is exclusively held for rental purposes 2. You're actively preparing it for rental 3. You're not unreasonably delaying making it available This was way more specific guidance than what my accountant gave me, and it came straight from the IRS.

I need to eat crow here. After being super skeptical about Claimyr in my earlier comment, I decided to try it anyway out of desperation. I've been trying to get through to the IRS for THREE WEEKS about my rental property questions. Claimyr had me on the phone with an actual IRS tax specialist in about 25 minutes. The agent confirmed that repairs made to get a property ready for rental are indeed deductible in the year paid IF you can show you're actively preparing to rent it out (like having a timeline, talking to property managers, creating rental listings, etc.). She also explained that even if I'm not actively showing the property yet, documenting my intent and making continual progress toward renting it supports treating it as "in service" for expense purposes. This clarification alone potentially saves me thousands in deductions I was going to push off based on my CPA's advice.

I've owned several rental properties for over 10 years, and here's what I've learned about pre-rental expenses: It's all about documentation and intent. Keep a clear timeline of: - When you purchased the property - What repairs you're doing and why they're necessary for renting - When you plan to list it - Any marketing activities (even preliminary ones) For my most recent property, I started taking pictures of "For Rent - Coming Soon" signs I placed in the windows, kept copies of draft rental listings I was preparing, and emails with my property manager discussing rental timeline. This documentation was crucial in supporting my deduction of pre-rental expenses. Remember, the IRS allows ordinary repairs to be deducted immediately, while improvements must be capitalized. A repair keeps your property in good working condition, while an improvement adds value or extends useful life.

Has anyone had experience with the 100-hour rule for rental activities? I thought if you spend at least 100 hours on your rental in a year and more time than anyone else, you qualify as actively participating, which affects how expenses are treated.

I went through this exact situation last year with my first rental property. What helped me was creating a detailed timeline showing when I bought the property, what repairs I was doing, and when I planned to have it ready for rent. The key insight I learned is that you can start deducting ordinary repairs as soon as you can demonstrate you're actively preparing the property for rental use - you don't have to wait until you actually have a tenant signed up. I started advertising "Coming Soon - Available August 1st" while still doing minor repairs, and that helped establish my intent. For your $3,700 in repairs, focus on documenting that these were necessary to make the property rentable (fixing roof leaks, patching drywall) rather than improvements that add value. Keep all your receipts and take before/after photos if possible. One thing that really helped me was keeping a simple log of all the work I was doing and when, plus screenshots of any rental listing drafts or communications with property managers. This created a paper trail showing continuous progress toward getting the property ready for rent. Your accountant is being conservative, which isn't necessarily wrong, but there's definitely room for legitimate deductions if you can properly document your rental preparation activities.

This thread has been incredibly helpful! I'm dealing with a similar situation with my first rental property purchase from last month. One thing I'd add based on my research is that the IRS Publication 527 (Residential Rental Property) specifically addresses this "placed in service" concept. What I found particularly useful was the distinction between startup costs (which may need to be amortized over 15 years) versus ordinary repair expenses (which can be deducted immediately). For example, if you're fixing existing issues to make the property rentable, those are generally repairs. But if you're adding new features or significantly upgrading systems, those would be improvements. I've been keeping a detailed spreadsheet categorizing each expense and the reason for it (e.g., "Fixed leaky faucet in kitchen - necessary for property to be rentable" vs "Upgraded to granite countertops - improvement"). This level of documentation should help support my position if there are ever any questions. The timeline approach that several people mentioned here is spot-on. I started my "available for rent" marketing about 2 weeks after purchase, even though I knew I'd need another month of repairs. Having that documented intent to rent seems to be the key factor in establishing when the property is considered "in service.