What Are Start-Up Expenses for Deduction Purposes?

Basically, start-up expenses refer to the money you will have to shell out in order to begin your rental activity.

These include most of the costs of getting your rental business up and running, such as:

  • License fees

  • Advertising costs

  • Attorney and accounting fees

  • Travel expenses

  • Market research expenses

  • Office supplies expenses

Tellus TIP:

Start-up expenses do not include the cost of buying your rental property.

As for the deduction amount, up to $5,000 of start-up expenses may be deducted for the year in which they are incurred. The remaining amount must be deducted in equal installments over the first 180 months in which you are in the business (commonly referred to as "amortization").