Rental property remodel and deductions

[ALOHAMATE]

Good day!

A major remodel that does not involve structural changes or foundation alterations was done in 2024 after the last tenants moved out of the condo we own for a few years. The remodel cost was $ 80,000 ($ 50,000 in labor, $ 4,000 in appliances, and $ 26,000 in all other materials). Here are my questions:

1. Should we put the $ 76,000 (labor + all other materials) as one or more Assets for depreciation and $ 4,000 (appliances) as another Asset for depreciation?
2. For the non appliance Asset ( $ 76,000 in labor + all other materials), should we categorize as “ Rental Real Estate Property” -> “Residential Rental Real Estate”, and describe as “Remodel”?
3. The remodel lasts a few months, and the invoice date of labor, appliances, and all other materials varies. Could we put the project finish date as the “Date purchased or acquired” in Asset for depreciation?

Thank you very much for your help : )

[AnnetteB6 · Accepted solution]

Yes, you are on the right track.  

1 - Yes, you can depreciate the appliances separately as their own assets and the remaining remodel cost as a single asset as well.

2 - Those are the correct choices since that will make the depreciation recovery period match the property itself.

3 - The project finish date is the date the asset is placed in service to start depreciation, so it is the appropriate date to use.

[ALOHAMATE]

Hi AnnetteB6,
Thank you so much! You helped clear up everything : )