No. What you have is considered a property improvement. Property improvements must be capitalized and depreciated over time. They can not be expensed. They have to be depreciated. Depreciation starts on the first day the business is open, or the first day the property improvement is placed in service, whichever is last.
Property Improvement.
Property improvements
are expenses you incur that add value to the property. Expenses for this are
entered in the Business Assets/Depreciation section and depreciated over time. Property
improvements can be done at any time after your initial purchase of the
property. It does not matter if it was open for business or not. It still adds value to the property.
To be classified as a
property improvement, two criteria must be met:
1) The improvement
must become "a material part of" the property. For example,
remodeling the bathroom, new cabinets or appliances in the break room. New carpet.
Replacing that old Central Air unit.
2) The improvement
must add "real" value to the property. In other words, when the property is appraised by a qualified,
certified, licensed property appraiser, he will appraise it at a higher value,
than he would have without the improvements.
Cleaning & Maintenance
Those expenses
incurred to maintain the property and it's assets in the useable
condition the property and/or asset was designed and intended for. Routine
cleaning and maintenance expenses are only deductible if they are incurred
while the property is classified as being "open for business".. Cleaning and maintenance expenses
incurred in the process of preparing the property for business use are not deductible. Period.
Repair
Those expenses
incurred to return the property or it's assets to the same useable condition
they were in, prior to the event that caused the property or asset to be
unusable. Repair expenses incurred are only deductible if incurred while the
property is "open for business". Repair costs incurred in the process of
preparing the property for the opening date are not deductible as an expense. Instead, they are declared as startup costs.
Startup costs - You can deduct a maximum of $5000 in startup cost the first year the business is open ***IF*** the business has $5000 of taxable profit to deduct it from. Any remaining startup cost in excess of the first year deduction are amortized (not capitalized) and deducted over the next 15 years.
Additional clarifications: Painting a room does not qualify as a
property improvement. While the paint does become “a material part of” the
property, from the perspective of a property appraiser, it doesn’t add “real
value” to the property.
However, when you do
something like convert the garage into a business office for example,
that adds “real value”. Of course, when you convert the garage to an office, you’re going to paint it. But you will include the cost of painting as
a part of the property improvement – not an expense separate from it.
