Solved: Where do I enter the expense of putting a steel roof on my mobile home in 2016 that I purchsed as a second home in 2006 and started renting in 2017?
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New Member

Where do I enter the expense of putting a steel roof on my mobile home in 2016 that I purchsed as a second home in 2006 and started renting in 2017?

My roof suffered wind damage in 2016 and my insurance company paid for about half of the cost of the steel roof. I paid for the other half. Is this considered an improvement that I would include as part of the total "Improvement Value" on the Property Tax Value screen? The tax assessors website shows that the last data upload was on 02/28/18 which is after the roof was put on. Do I still need to add my part of the cost (and exclude my reimbursement from the insurance company) to the improvement value on the Property Tax Value screen? Do I also need to enter it as a Miscellaneous Expense? Do I also add it (the total cost) as a property asset to be depreciated or will it be depreciated by including it in the improvement on the PropertyTax Value screen? I have previously posted part of this question but am confused on where in TurboTax to put the expense/improvement.

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Level 15

Where do I enter the expense of putting a steel roof on my mobile home in 2016 that I purchsed as a second home in 2006 and started renting in 2017?

You'll work this through the Rental & Royalty Income (SCH E) section of the program, and only that section. The roof is a property improvement and will be listed as such in the assets/depreciation section and depreciated over 27.5 years. Your cost basis for the roof will be the total cost of if, regardless of where the money came from. Since 2017 is your first year doing this, I hope you find the below information helpful, informative and educational. I commonly see first time landlords do things wrong that first year, because the program does not provide the clarity needed (in my opinion). So I provide that clarity below. Please feel free to ask more questions, as/if they arise as you work it through.

Rental Property Dates & Numbers That Matter.

Date of Conversion - If this was your primary residence before, then this date is the day AFTER  you moved out.
In Service Date - This is the date a renter "could" have moved in. Usually, this date is the day you put the FOR RENT sign in the front yard.
Number of days Rented - the day count for this starts from the first day a renter "could" have moved in. That should be your "in service" date if you were asked for that. vacant periods between renters count also PROVIDED you did not live in the house for one single day during said period of vacancy.
Days of Personal Use - This number will be a big fat ZERO. Read the screen. It's asking for the number of days you lived in the property AFTER you converted it to a rental. I seriously doubt (though it is possible) that you lived in the house (or space, if renting a part of your home) as your primary residence or 2nd home, after you converted it to a rental.
Business Use Percentage. 100%. I'll put that in words so there's no doubt I didn't make a typo here. One Hundred Percent. After you converted this property or space to rental use, it was one hundred percent business use. What you used it for prior to the date of conversion doesn't count.

RENTAL POPERTY ASSETS, MAINTENANCE/CLEANING/REPAIRS DEFINED

Property Improvement.

Property improvements are expenses you incur that add value to the property. Expenses for this are entered in the Assets/Depreciation section and depreciated over time. Property improvements can be done at any time after your initial purchase of the property. It does not matter if it was your residence or a rental at the time of the improvement. It still adds value to the property.

To be classified as a property improvement, two criteria must be met:

1) The improvement must become "a material part of" the property. For example, remodeling the bathroom, new cabinets or appliances in the kitchen. New carpet. Replacing that old Central Air unit.

2) The improvement must add "real" value to the property. In other words, when  the property is appraised by a qualified, certified, licensed property appraiser, he will appraise it at a higher value, than he would have without the improvements.

Cleaning & Maintenance

Those expenses incurred to maintain the rental property and it's assets in the useable condition the property and/or asset was designed and intended for. Routine cleaning and maintenance expenses are only deductible if they are incurred while the property is classified as a rental. Cleaning and maintenance expenses incurred in the process of preparing the property for rent are not deductible.

Repair

Those expenses incurred to return the property or it's assets to the same useable condition they were in, prior to the event that caused the property or asset to be unusable. Repair expenses incurred are only deductible if incurred while the property is classified as a rental. Repair costs incurred in the process of preparing the property for rent are not deductible.

Additional clarifications: Painting a room does not qualify as a property improvement. While the paint does become “a material part of” the property, from the perspective of a property appraiser, it doesn’t add “real value” to the property.

However, when you do something like convert the garage into a 3rd bedroom for example, making a  2 bedroom house into a 3 bedroom house adds “real value”. Of course, when you convert the garage to a bedroom, you’re going to paint it. But you will include the cost of painting as a part of the property improvement – not an expense separate from it.


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4 Replies
Level 15

Where do I enter the expense of putting a steel roof on my mobile home in 2016 that I purchsed as a second home in 2006 and started renting in 2017?

You'll work this through the Rental & Royalty Income (SCH E) section of the program, and only that section. The roof is a property improvement and will be listed as such in the assets/depreciation section and depreciated over 27.5 years. Your cost basis for the roof will be the total cost of if, regardless of where the money came from. Since 2017 is your first year doing this, I hope you find the below information helpful, informative and educational. I commonly see first time landlords do things wrong that first year, because the program does not provide the clarity needed (in my opinion). So I provide that clarity below. Please feel free to ask more questions, as/if they arise as you work it through.

Rental Property Dates & Numbers That Matter.

Date of Conversion - If this was your primary residence before, then this date is the day AFTER  you moved out.
In Service Date - This is the date a renter "could" have moved in. Usually, this date is the day you put the FOR RENT sign in the front yard.
Number of days Rented - the day count for this starts from the first day a renter "could" have moved in. That should be your "in service" date if you were asked for that. vacant periods between renters count also PROVIDED you did not live in the house for one single day during said period of vacancy.
Days of Personal Use - This number will be a big fat ZERO. Read the screen. It's asking for the number of days you lived in the property AFTER you converted it to a rental. I seriously doubt (though it is possible) that you lived in the house (or space, if renting a part of your home) as your primary residence or 2nd home, after you converted it to a rental.
Business Use Percentage. 100%. I'll put that in words so there's no doubt I didn't make a typo here. One Hundred Percent. After you converted this property or space to rental use, it was one hundred percent business use. What you used it for prior to the date of conversion doesn't count.

RENTAL POPERTY ASSETS, MAINTENANCE/CLEANING/REPAIRS DEFINED

Property Improvement.

Property improvements are expenses you incur that add value to the property. Expenses for this are entered in the Assets/Depreciation section and depreciated over time. Property improvements can be done at any time after your initial purchase of the property. It does not matter if it was your residence or a rental at the time of the improvement. It still adds value to the property.

To be classified as a property improvement, two criteria must be met:

1) The improvement must become "a material part of" the property. For example, remodeling the bathroom, new cabinets or appliances in the kitchen. New carpet. Replacing that old Central Air unit.

2) The improvement must add "real" value to the property. In other words, when  the property is appraised by a qualified, certified, licensed property appraiser, he will appraise it at a higher value, than he would have without the improvements.

Cleaning & Maintenance

Those expenses incurred to maintain the rental property and it's assets in the useable condition the property and/or asset was designed and intended for. Routine cleaning and maintenance expenses are only deductible if they are incurred while the property is classified as a rental. Cleaning and maintenance expenses incurred in the process of preparing the property for rent are not deductible.

Repair

Those expenses incurred to return the property or it's assets to the same useable condition they were in, prior to the event that caused the property or asset to be unusable. Repair expenses incurred are only deductible if incurred while the property is classified as a rental. Repair costs incurred in the process of preparing the property for rent are not deductible.

Additional clarifications: Painting a room does not qualify as a property improvement. While the paint does become “a material part of” the property, from the perspective of a property appraiser, it doesn’t add “real value” to the property.

However, when you do something like convert the garage into a 3rd bedroom for example, making a  2 bedroom house into a 3 bedroom house adds “real value”. Of course, when you convert the garage to a bedroom, you’re going to paint it. But you will include the cost of painting as a part of the property improvement – not an expense separate from it.


View solution in original post

New Member

Where do I enter the expense of putting a steel roof on my mobile home in 2016 that I purchsed as a second home in 2006 and started renting in 2017?

Thanks so much, that clarifies things for me. Now I need to know how to categorize the roof as an asset. Do I choose "Residential Real Estate" or "Appliances, carpet, furniture," or "Land Improvements?"
Level 15

Where do I enter the expense of putting a steel roof on my mobile home in 2016 that I purchsed as a second home in 2006 and started renting in 2017?

It's residential rental real estate and gets depreciated over 27.5 years. The cost will be whatever it cost for the new roof in it's entirety, regardless of where the money came from that paid for it, and the land value will obviously be zero.
New Member

Where do I enter the expense of putting a steel roof on my mobile home in 2016 that I purchsed as a second home in 2006 and started renting in 2017?

Thanks so much for your definitive, thorough, and clear answer!
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