Improvements Before Rental Property Is Placed In Service

4 Replies

Hi.

This summer we bought a condo and renovated it before placing it in service. One of the renovations was a laminate wood floor, which, because it is not permanently attached to the building, is normally only depreciated over 5 years. However, the condo itself is depreciated over 27.5 years. If the condo had already been in service, we would have depreciated the laminate flooring over 5 years, but since we hadn't placed the condo in service before we added the laminate flooring, do we have to group it with the condo itself and depreciate it over 27.5 years?

I have the same question for appliances that we added before placing the condo into service.

Thanks!

@Britt Griscom  I am 99% sure anything doing before placing it into service has to be depreciated over 27.5 years.  But @Steven Hamilton II  would be able to answer for sure.  I also suggest getting this book if you are doing your own taxes 

http://www.amazon.com/Every-Landlords-Tax-Deduction-Guide/dp/1413321143/ref=sr_1_1?ie=UTF8&qid=1421641337&sr=8-1&keywords=landlord+tax+deductions

Originally posted by @Britt Griscom :

Hi.

This summer we bought a condo and renovated it before placing it in service. One of the renovations was a laminate wood floor, which, because it is not permanently attached to the building, is normally only depreciated over 5 years. However, the condo itself is depreciated over 27.5 years. If the condo had already been in service, we would have depreciated the laminate flooring over 5 years, but since we hadn't placed the condo in service before we added the laminate flooring, do we have to group it with the condo itself and depreciate it over 27.5 years?

I have the same question for appliances that we added before placing the condo into service.

Thanks!

 Yes. Any repairs or improvements made before the unit is put into service must be added to the basis. Please see Publication 527, Residential Rental Property, for more information: 

http://www.irs.gov/pub/irs-pdf/p527.pdf

Originally posted by @Britt Griscom :

Hi.

This summer we bought a condo and renovated it before placing it in service. One of the renovations was a laminate wood floor, which, because it is not permanently attached to the building, is normally only depreciated over 5 years. However, the condo itself is depreciated over 27.5 years. If the condo had already been in service, we would have depreciated the laminate flooring over 5 years, but since we hadn't placed the condo in service before we added the laminate flooring, do we have to group it with the condo itself and depreciate it over 27.5 years?

I have the same question for appliances that we added before placing the condo into service.

Thanks!

 Britt,

You may depreciate it over 5 years instead of the 27.5 if it was done directly before. 

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