I'll try and make this short. I formed an LLC. Purchased a condo to rent as a short-term rental in January. Spent $80k on the purchase. I did no major improvements to the condo immediately after purchase. Covid hit. I agreed to rent out the condo for 1-month. I charged $900. Soon after the renter moved in, a tornado damaged the unit. I refunded the renter the complete rental amount. I received about $10,500 from the insurance company as a payout. I assume that payout should go into “rental income”. Of that, I spent about $7,700 on rehab and improvements (New flooring, cabinets, countertops, painting, beadboard, trim, kitchen sink, faucet, toilet). That also included appliances.
Should I use the purchase amount of $80K as one asset to depreciate and then add each improvement as a unique real estate asset? $1,700 for the countertop? $1,200 for the flooring? .. etc, or should I just total everything together $80k + the amount spent on real estate improvements and use that as the depreciable amount. It seems like overkill to list each improvement and different date of installation, but because I had a renter (even though I refunded their rent) do I need to?
Also, things like a new mattress, a new chair, new TV. I know these are things most people probably expense, but shouldn’t they be individually listed as capital improvements and depreciated?
