Damages were repaired and at the same time made improvemnts. Can those improvements be applied as expense under section 179?

[johndoe970]

Rental condo was flooded at the beginning of 2016. Insurance paid for damages and deductibles were $1060.00. Damages were repaired with additional improvements as new electric range, counter top, carpet, tiles, paint, kitchen sink, and two toilette. My question is: applying the improvement costs as expenses rather than depreciating under section 179? To mention that there was no rental income during 2016.

Thanks,  

[view2 · Accepted solution]

For residential rental property reported on Schedule E, assets used there are specifically not eligible for Section 179 expensing.

Repairs as part of an extensive remodeling or restoration of your property, the whole job is an improvement. In that case, you should capitalize and depreciate the repair costs as the same class of property that you have restored or remodeled . Depreciated 27.5 years.

Appliances are a 5 year property .

With out passive  income to cover passive losses they  are carryforth [form 8582] until you have passive income to cover.

[johndoe970]

Thanks for taking time for reviewing and answering my question.

[view2]

Your welcome.