Condi rental expense

[SAC1122]

I have a condo that I rent out. This past year I remodeled one of the bedrooms removing drywall, installing new insulation and installing new drywall. I then installed new flooring. How should I go about entering these expenses? My only labor expense was for a drywall finisher that cost me $450.

[MindyB]

In order to enter these expenses, you will compute the total of the purchase price of supplies for the drywall, insulation, and the $450 labor for the drywall.  Your personal labor is not deductible. 

Here is how to enter the costs:

1. Navigate to Federal > Wages & Income > Rentals, Royalties, and Farm > Rental Properties and Royalties (Sch E)

2. Select the Rental property by clicking the pencil

3. Choose Add expense of asset

4. Decide if this is an asset or repair. ‌If you classify it as an asset, you can choose to deduct the amount under Section 179, if qualified. You may also be able to substantiate the expense as a repair. ‌The room you remodeled cannot be a major component of the condo; the work cannot have been a betterment, restoration, or adaption of the unit of property. ‌For a definition of those tests, see  Tangible property regulations – Frequently asked questions.

You can also read more about Tax Deductions for Rental Property Depreciation.