I made major renovations to a rental house that I own. I used an architect and a project manager. How do I account for their fees? under expenses or asset/depreciation?

[CherylW · Accepted solution]

You would depreciate it, most likely in the category of Land Improvements.

[view2]

If you construct, create, or otherwise produce property, you must capitalize the costs as your basis.
Constructing assets.   If you build property or have assets built for you, your expenses for this construction are part of your basis. Some of these expenses include the following costs.

    Land.

    Labor and materials.

    Architect's fees.

    Building permit charges.

    Payments to contractors.

    Payments for rental equipment.

    Inspection fees

<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p551/ar02.html#en_US_2016_publink1000256908">https://www.irs.gov/pu...>

The total job renovation is entered as one asset on date placed in service and depreciated 27.5 years same as original property. [land is not depreciated]