All Forum Posts by: Carol Smith

We renovated and used a home as our primary residence for a number of years before converting it to a rental.  We have detailed receipts and spreadsheets summarizing the cost of the improvements that were made.  I believe that it would be possible to use this detail to break the assets out into specific classes, rather than lumping everything into 27.5 year property in the year it was placed into service. 

Any thoughts or experiences with doing this?  The IRS example of a home converted to rental use in Pub 527 shows all of the improvements being included as 27.5 year property, but I can't think of any reason that would be required if there's a legitimate way to allocate costs for improvements to specific, shorter-life categories.

Also of note - this is a very profitable rental, so without breaking out depreciation (and thereby increasing it), there will be taxable income for the year.