Rental Property Roof Replacement - Cost divided between 2024 and 2025

[golfzerodelta]

Hi - quick question about correctly depreciating the cost of a new roof on a rental property. 

The need for a new roof was identified in fall 2024, and with the way the billing worked out with the contractor, I needed to pay 50% up-front in Dec 2024, and will pay the remaining in Feb 2025. 

My question is when will I be able to depreciate the asset? Can I depreciate the first 50% in 2024 and include the remaining 50% in my 2025 return, or is the guideline to only include it in 2025 once the full asset is in service?

Thanks! 

[DavidD66]

You can start to depreciate the new roof once it is "placed in service".  So you if you deprecate it you start the depreciation (or take bonus depreciation) in February of 2025 if that's when the roof was finished.  If you just replaced the shingles, and not the underlying sub-roof you can expense the cost instead of capitalizing and depreciating it.  

[golfzerodelta]

Thanks for that clarification! It was a full replacement so it is definitely an improvement and not an expense.