I currently lease a home and have it setup as a vacation rental for others to rent. Recently, I remodeled the kitchen, 2 bathrooms, ran new copper plumbing, built a new patio, and paved a new driveway.
I capitalized each item as an asset by following the steps below:
1. Clicked on "Assets being depreciated" under "Business Assests"
2. and then "add an asset"
3. then "Intangibles, Other Property" out of the list of:
- Computer, Video, Photo and Telephone Equiment
- Tools, Machinery, Equipment, Furniture
- Real Estate Property
- Intangibles, Other Property
4. then "Land Improvements"
5. then typed in 1st Remodeled Bathroom and put in the cost and date
6. Checked the box that says "purchased this asset new" and the box that says "Yes i've always used this item 100%.."
The system gave me 50% up front and the rest to be capitalize in 15 years. Is this the correct way to do it?
How would the capitalization work if I have to return the rental in 5 years. Would I be able to capture the rest of the capitalization or forfeit the remainder?
Thank you so much for your time.
