If you make a permanent improvement to a rented property, the cost must be depreciated. When going through the TurboTax business income and expenses, enter the improvement as an Asset in the Business Assets section. Your Asset is Real Estate Property, your date is the date you started to make improvements, category Qualified improvement property.
Examples of improvement:
- New bathrooms, interior office construction, energy efficient improvements.
- Remodeling of interior space, counters, lighting, security systems, walls/floors
- Common area improvements in a multi-tenant building
Improvements that are not permanent (do not add value to the leased property) are your repairs, and deducted as regular business expense.
