Yes, you would add assets to the property when you do improvements; they will be capitalized and depreciated. You can expense the repairs. @Topangamama
You are allowed to depreciate real estate over a longer time period:
- 27.5 years (residential rental properties)
- 39 years (commercial buildings)
Land is not depreciable (it doesn't wear out), but land improvements such as roads, sidewalks or landscaping may be written off over periods of 10, 15 or 20 years depending on the specific nature of the asset.
The default MACRS depreciation method gives you a bigger tax deduction in the early years, while the asset is still new, and a smaller deduction towards the end of the asset's useful life.
Because most business property is depreciated with MACRS, that's the method that TurboTax applies by default. However, you can apply straight line depreciation if you want. In fact, straight-line is the only option available for intangible assets, which can't use MACRS nor Section 179.
CAUTION Switching to straight line depreciation requires a comprehensive knowledge of depreciation methods, asset classes, and recovery periods. Even tax experts can get confused. For this reason, we advise against switching unless you are absolutely sure you know what you're doing.
Tax Deductions for Rental Property Depreciation
Asset classes, recovery periods, and instructions can be found in Appendix B, which starts on page 98, of IRS Publication 946, How to Depreciate Property. Even though this publication is labeled 2019 the IRS has provided updates for 2020 and this is the guide to use. We'll figure out which asset class and recovery period applies to your asset.
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