Depreciation of Windws in Prim. Residence converted into Rental

Austin, Texas
Tax, SDIRAs & Cost Segregation
4yFollow

Depreciation of Windws in Prim. Residence converted into Rental

Lacey A.
Member since 2021 · 34 posts · 6 votes

We lived in the SFH and replaced all of the original windows and sliding doors in October 2019 to improve energy efficiency. (They were 40+ yo) We moved out and converted the SFH into a rental in March 2021.


On our expenses, can we now claim depreciation of the cost of windows and doors? 

0Reply
31 views

Most Popular Reply

Ashish AcharyaBusiness Member
CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
4y

Yes, you can deprecate the lower of the FMV or the cost. The FMV would probably be lower now unless you can prove the value of the window has gone up.

[email protected]941-914-7779
INVESTOR FRIENDLY CPA®4.9242 Reviews
WebsiteView Page
TaxMD® | Tax Planning Software
WebsiteView Page
4Reply
See this reply in the discussion

5 Replies

Jump to latestLatest
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    4y

    I don’t see how. But, maybe? Your cpa should be able to tell you your cost basis. (Since it was already a rental last year I assume they’ve already done all the math.) I THINK you have to use the costs from when you actually bought it, not the stepped up value of when it because a rental. Which is why you want to make sure you aren’t converting a bunch of tax free appreciation into taxable gains. 

    1Reply
  • Sergey A. Petrov
    Real Estate Consultant · Seattle, WA · Member since 2022 · 1k+ posts · 784 votes
    4y

    I believe all major improvements add to your cost basis for depreciation purposes. The cost basis is purchase + capital improvements whether you owner occupied it or not (same formula goes for capital gains). What if it was a rehab house? Most certainly rehab costs would go into it.

    Regular maintenance doesn’t count. Double check with your tax accountant as I am not one.

    1Reply
  • David M.
    Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
    4y

    @Lacey A.

    Consult a qualified professional or two..

    Sounds like you made the improvement before you put the property into service as a rental.  So, the costs would be applied to your cost basis for your home -- just like any other situation.  Because its in your cost basis, you are effectively depreciating, some of it anyway, via your current depreciation schedule.  

    If you had made a significant capital improvement AFTER you put the property into service, then you would depreciate that improvement directly.

    Hope this helps.  Good luck.

    1Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
    4y

    Yes, you can deprecate the lower of the FMV or the cost. The FMV would probably be lower now unless you can prove the value of the window has gone up.

    [email protected]941-914-7779
    INVESTOR FRIENDLY CPA®4.9242 Reviews
    WebsiteView Page
    TaxMD® | Tax Planning Software
    WebsiteView Page
    4Reply
  • Michael PlaksPro Member
    Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
    4y

    @Lacey A.

    Yes, you can depreciate it, with all the details already mentioned on this thread.

    Just to make sure we're on the same page, the depreciation will be slow: it's spread evenly over 27.5 years. If you were thinking of the 100% bonus depreciation, it does not apply to windows and doors, regardless of the history of this property.

    3Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free