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Level 3
posted Mar 25, 2024 1:25:47 PM

Remodel, Invoiced, Depreciated, No Contractor to pay?!?

Last September I had a rental unit remodeled and the contractor invoiced me for a little over $14k.  

 

The contractor never gave me a W-9 and has since disappeared.

 

The property was placed into service on October 1, 2023.  

 

Without payment, nor even knowing when payment will be accepted, do I start the depreciation last October, do I start once payment has been rendered after W-9, or am I just losing out on this depreciation until I someday can pay him?  

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1 Best answer
Employee Tax Expert
Mar 25, 2024 1:37:29 PM

You should place the improvements in place and start depreciating the cost as of October 1, 2023.  I think you can reasonably assume that the contractor will reappear and want to get paid.  

3 Replies
Employee Tax Expert
Mar 25, 2024 1:37:29 PM

You should place the improvements in place and start depreciating the cost as of October 1, 2023.  I think you can reasonably assume that the contractor will reappear and want to get paid.  

Level 3
Mar 25, 2024 4:48:17 PM

Ok.  He also remodeled a second unit but has never invoiced me for it but I do have the estimate in writing for a little over $15k.  

 

I could use the estimate but if his final number is different then I'm in trouble.  

 

If I choose not to depreciate until he actually notifies me the amount by invoice then is this first year lost or do I just start the depreciation from when I found out the final balance?  Unit has been in service since November.

Employee Tax Expert
Mar 26, 2024 10:27:57 AM

As DavidD66 said earlier, use the estimated cost for the renovation and begin depreciation on the date the unit was placed in service. If the contractor comes back with a different number that you actually pay, you can add another improvement asset to cover the difference.