Best to ask your CPA or tax professional.

I agree with sushipup. Please ask either your tax person or one specializing in rentals and make sure they are CPA's. You can also get a book at staples or Quicken has a program that you can get for rentals. Now is the time to start. Again ask your tax person.

I would start by reading the IRS publication on rental income from start to finish and then call the IRS with your question if it isn't covered there. The IRS phone number is listed in the publication.

This doesn't quite answer your question, but:
Pre-rental expenses. You can deduct your ordinary and necessary expenses for managing, conserving, or maintaining rental property from the time you make it available for rent.

Here is a link that might be useful: Publication 527

There are two things at play here and a CPA qualified is best.

A. You have acquired an investment property which creates a business entity for you and any gains or losses (+depreciation) must be reported. Most of the HOA, closing, repairs, etc. Wll reduce your rental income gains or apply as a credit going forward
B. when you collect rental income you will also have to include this but overall you will still report a loss for owning this property even if the rent covers your mortgage and escrow?

Some other items you may not think of - cell phone, vehicle (if only used for this property), any repair or bill should have a receipt as your operating cost.

I really can't see running to a CPA with this. If you are half way intelligent and read the tax publication, you can figure it out.

Definitely give your tax accountant a call. You have many more issues than this to discuss with him/her. You need to have everything set up as efficiently and properly as possible so that at the end of the tax year, you hand him/her a workable stack of information.

Your tax accountant isn't just there from Feb-April--he's there all year. I give mine a call anytime I have a question that pertains to what's going to be happening to my taxes. He's happy to offer advice, many times he doesn't even charge me. AND by asking ahead of time, you often have the option of setting things up in the most favorable way for you. There are legal ways to reduce your tax liability, but you need to be getting good advice, so you don't make costly mistakes.

Please call your tax accountant a call--this is what they do. And if you don't have one--with going into this investment, now's the time to get one.

While I do agree it is something you can cover on your own by reading - a qualified tax accountant familiar with real estate ownership can guide you to items like capital expenditures and their depreciation formula which might not be so simple.

I also agree, best to discuss this in detail now, you will save money with preplanning. I own numerous rental properties and use a competent accountant.

bump

the depreciation schedules aren't at all difficult. Obviously you all are happier about paying a tax accountant than I am. I have 7 rental units so I have some experience with this. When I was a paralegal, I read the tax codes for the attorneys. It wasn't hard and I'm not a genius.

If you decide you need the help of a professional, there is another choice in addition to a CPA. You could use an Enrolled Agent. Enrolled Agents have passed an extensive test given by the IRS and have passed a background check by the IRS. They have to take a minimum of 24 hours of continuing education in tax law and ethics every year. Not all CPAs are experts in preparing taxes.

I was a landlady for 20 years and I would advise you to hang on to all the receipts for work that you do. When you have your taxes figured you will have everything you need. The accountant will know what to do. If you do them yourself you do need to talk to an accountant for sure.

You didn't ask for this advice, but will tell you anyway. You will keep tenants longer if you keep your rent a little lower than the nearby condos and have it very clean when you show it. We did that and kept ours full all the time.