Rental Property

[SunTaxMan]

Taxpayer bought at duplex, to "fix and eventually rent," in 2009.

1/2 ready to rent 2-1-10. The second 1/2 not ready yet - probably 4-1-10.

My evaluation. ALL expenses between purchase date and "available to rent" date, i.e, purchase, RE Tax, Interest, capital improvements, and operating expenses (e.g., utilities) all accumulated and to become part of basis. Depreciation begun on 1/2 at 2-1-10. The remainder with depreciation beginning when that half ready.

After "available to rent" expenses handled "normally" - taxes, interest, repairs, utilities, deducted as expenses on Schedule E.

Prior to "available to rent" accumulated and capitalized. Nothing deducted prior to "availabe to rent" date - i.e., no reporting in 2009.

I wondered about the 1098 for Interest. 1098 in 2009 but no reporting of 1098 Interest on 2009 returns. Mortgage Interest will be included in reporting for 2010, but it will not appear as Mortage Interest - it will be "buried" in depreciation calaculation, therefore, no problem with 1098 matching. Correct?

Am I missing something?

Thanks,

[Pacun]

You should use Mortgage interest and RE Taxes on schedule A and add to the basis other expenses prior to 02/10.