So I'm doing the taxes for the place, and I assumed that all $18K should be added to the property's basis and depreciated. But then I read something about "betterment" that seemed to be suggesting that costs that make systems better must be capitalized while costs that just fix stuff can be expensed.
Capitalization is the same basically the same as adding the cost basis and depreciated.
Yes, you would use $18k for the furnace, if this is a rental property, you would not add it to the cost basis. Instead in the asset section of the rental questions, you will add your new furnace as a new separate asset.
Also, depending on how you have the investment set up and who paid the expense, you may need to split the asset with your son so $9k on your return as the value and $9k on his return as the value of the asset.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
