No, you just flat out can not expense it as a rental expense. That's because it meets the requirements to be classified as a property improvement.
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 kitchen. 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.
Here's how this works for your situation.
That percentage of your primary residence that is "exclusive to the renter" is the percentage of your cost basis that is depreciated. So say you have a two bedroom two bath house. If one of the bathrooms is only accessible from the bedroom (as is common with a master bath) and that is the bedroom you are renting out, then both that bedroom and the attached bath are without question, "exclusive to the renter". If those two rooms together comprise 15% of your total floor space, then 15% of your cost-basis is depreciated over 27.5 years. Now you have an in ground pool in the back that as I understand it, in it's present state is unusable.
Doing what is necessary to bring this pool to a useable state will without question, be an improvement to the property that will (also without question) increase the value of the property. So for tax purposes ( stress *T*A*X* purposes!) that will be a property improvement, not a repair. Therefore your costs for this will be capitalized with the appropriate percentage depreciated over 27.5 years.
You enter your *total* cost of the improvement in the assets/depreciation section, making sure to declare the business use percentage that matches your floor space percentage. So using my numbers above, if I'm renting out 15% of my floorspace to the renter for their exclusive use, I will declare my pool property improvements to be 15% business use. That will depreciate 15% of the cost of the pool over the next 27.5 years starting on the date you place that pool "in service", which will be the first day it is available for use, weather it's actually used on that day or not.
