It depends. The IRS generally categorizes this type of expense as a capital improvement that must be depreciated rather than deducted as a current expense. However, you may qualify to deduct it as a current expense under the safe harbor election. This option is generally available for Schedule C businesses, rentals, farms, and farm rentals. TurboTax will prompt you to answer questions to determine your eligibility.
General Rule:
"Capitalize the cost of reconditioning, improving, or altering your property as part of a general restoration plan to make it suitable for your business. This applies even if some of the work would by itself be classified as repairs."
"These costs are a part of your investment in your business and are called capital expenses. Capital expenses are considered assets in your business. In general, there are three types of costs you must depreciate."
Note: If you are just starting a new business, you can elect to deduct or amortize certain business start-up costs. Refer to page 24 under the section titled Business StartUp and Organizational Costs, in the link above.
Safe Harbor Election:
You may qualify to make a Safe Harbor election and claim the renovation as an expense, instead of depreciating it as an asset.
[Edited 01.15.2018 I 4:29 pm]
