Deducting rental expenses before a property is available to rent is addressed directly in the provided information. Specifically, it is stated that "rental expenses incurred before a property is available to rent may not be deductible as they are not yet incurred for the production of income." This statement is found within the context of § 212. Expenses for production of income, which outlines the conditions under which expenses related to the production, management, conservation, or maintenance of property held for the production of income may be deducted.
The rationale behind this rule is that expenses must be incurred in the pursuit of producing income to be deductible. Since a property that is not yet available for rent is not in a position to produce income, expenses related to such a property do not meet the criteria for deduction under § 212. This principle is consistent with the broader tax law framework, which generally allows deductions for ordinary and necessary expenses paid or incurred during the taxable year in the production or collection of income, or for the management, conservation, or maintenance of property held for such purposes.
Therefore, based on the provided information, rental expenses incurred before a property is available to rent are not deductible.
Sources:
Rev. Rul. 68-590
Rev. Rul. 74-358
Publication 927 (2020)
§ 212. Expenses for production of income
§ 162. Trade or business expenses
Publication 527 (2022)
