Capturing improvements to Personal Residential Property turned into a short term rental

Forum|Forum|3 months ago
April 6, 2026
1 reply
118 views

I will use fictional round numbers for ease in this scenario to ask my question.

I purchased a beach condo in 1996 for $100K. I turned it into a short-term vacation rental in 2024, when its FMV was $200K. So, when I used TurboTax for my 2024 taxes I used $100K as my basis, because it is the lesser of the two values.

Since the property was purchased, major improvements have been made BEFORE it was turned into a rental. In 2003, new windows were put in for $5,000. In 2013, a new kitchen for $10,000.

My question is, do I add those capital improvements to the cost basis as depreciable assets, even though those investments were made before the property was converted into a rental? So, for example, the current asset summary lists the condo at $100K, and a new HVAC unit installed in 2024 at $3K, being depreciated annually according to their respective MACRS.

Would I add the kitchen reno and the window replacement so my list would look like this?:

-- 1996 Condo $100,000

-- 2024 HVAC $3,000

-- 2013 Kitchen Renovation $10,000

-- 2003 Window Replacement $5,000

Or do I NOT get to depreciate those improvements because they were made before the rental property was put in service?

DaveF1006

Level 15

The 2003 windows and 2013 kitchen are not separate line items for depreciation. Because these improvements were made before the property was "placed in service" as a rental, they are rolled into the initial value of the building.

You would place the HVAC on its own depreciation schedule but the windows and the kitchen remodel will be part of the adjusted basis of the rental thus the basis of your rental is $115,000, which includes the rental, the windows, and the kitchen remodel.

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