rental property basis update

[sanbos5324]

How and when do I update the (cost) basis of a rental property after installing a new ($5000) water heater?  I have the original basis of the rental property, do I update the basis (depreciation) for the year I purchased or update it at the time of sale?  At this point I cannot take any deduction because out combined income is too high?  Suggestions besides a professional accountant?

[DianeW777]

No, do not update the cost basis of your rental home because this cannot be changed after the first year placed in service.

Follow the instructions below to enter the water heater as a new asset for your rental activity. 

1. Click on Wages & Expenses
2. Scroll to Rental properties and royalties, click Edit/Add or Start/Revisit
3. Do you want to review your rental?, click Yes
4. Under Rent and Royalty Summary, click Edit
5. Click Update to the right of Assets/Depreciation
6. When you enter the water heater asset you should select Office furniture and fixtures...  for 7 year depreciation.
7. Answer the questions to complete your entry 

Since you believe the profit is low or at a loss, you should not select Special Depreciation Allowance so that you have a greater deduction over time.