Property improvements are indeed entered in assets and depreciation once it has been rented.
Property improvements do add value to the property regardless of when it was done.
I completely agree.
No, you are not allowed to add and here is why.
Example:
- Bought the house for $100,000
- lived there and remodeled, spending $50,000 on tools, walls, whatever to improve the house
- moved out and rented the house.
- The house is now going to be depreciated on the lower of Fair Market Value or Cost basis.
- So, let's say the house is now worth $200,000, FMV. Your basis in the house is $150,000 for all the money you put in to improve and buy the house.
- You are depreciating the house based on $150,000. All the money is being accounted for. There is nothing left to write off.
@Topangamama
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