- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Investors & landlords
Since you placed the property in service in 2021, you can add those capital improvements to the original cost basis or you can add all capital improvements together to create a second asset. It's actually easier for the future if you add them together and create one asset for the date placed in service. Keep in mind it's the date placed in service and not the date the improvements were made that matters.
Any capital improvements in the future will be a separate asset and entered like a new asset using the same recovery period as the original building. (27.5 years for residential rental property).
One additional piece of information, if a property is converted from personal use to rental use, the amount for the house that can be used for depreciation is the actual cost (original plus all capital improvements over the years of ownership) or the fair market value (FMV) on the date placed in service, whichever is less. In most cases the cost is actually the lower amount.
**Mark the post that answers your question by clicking on "Mark as Best Answer"