Where to enter rennovation expenses for rental property?

[socalpatrick5]

I purchased a rental property in October 2023 and I completed $20,000 of rennovations which should be addded to the basis.  Should I just add $20,000 to the "improvement value" areas (which is right below the land value"? In other words, if the structure portion of the purchase is $400,000, should I just put $420,000? 

 .. or should I list that $20,000 of rennovation under "assets and depreciation" to be depreciated seperately? 

Thank you.

[DianeW777]

It depends. If the rental activity began after the renovations you should add them together as part of the cost of the rental property ($420,000 in your example). 

If the rental activity began before the renovations you can add them as a separate asset.

[socalpatrick5]

Thanks Diane for the super quick response.  The home was available for rent before the rennovations but it did not get rented until 3 months after due to slow rental market.  I was basically rennovating until someone rented it out.  

Also, I noticed that at a $400,000 improvement value for the structure, TT indicates the home will be depreciated by $491,789 over 27.5 years.  However,  at 420,000 improvement value, TT indicates the home will be depreciated by $496,223 over 27.5 years.  Why does $20,000 added rennovation only equal $4,434 added depreciation over 27.5 years? 

Thank you again.