Dan and Elizabeth are just getting into real estate and ask the following question:

Q: We are accumulating many expenses in the start-up of our investing business (as we would in the start up in any type of business). In your Audio CD on business expenses, you mention that the expenses cannot be deducted until certain requirements are met. If we purchase investment property in this year, would that qualify the expenses? Thanks!

A: The question is whether purchasing an investment property qualifies as starting a business. The answer is a little more involved than that. Not only do you have to purchase the investment property, you have to have it ready for rent and then put it on the market to rent. Only when you have a property ready and marketed for rent have you started your business. Then, you need to review our CD on Start Up Expenses to learn how to deduct all of the expenses you have incurred getting ready to start your business.

Warmest regards,

Tom