Can I depreciate a new limited common element (elevator) added at the condo we rent out, or must I treat it as payment of a fee?

[riordanrobert]

Our condo complex added an elevator that serves four units, including one we rent out to others.  The four unit owners were assessed and paid 1/4 the cost.  The association owns the elevator, but it is assigned to the four units as a limited common element.  Can I treat this as having added an asset to our unit and depreciate it, or must I treat what we paid as something like a regular HOA fee?  How is our basis affected?

[PatriciaV · Accepted solution]

Yes, your pro rata share of the cost of these improvements should be added to your adjusted basis in the property. The improvements are depreciated over the same period as the residential property (27.5 years).