$15,000 rental house renovation: One time expense? or over years depreciation?

[manbeing]

I spent $15,000 renovating my rental property in 2024 (LVP flooring installation, two bathroom renovations, hot water heater install, repiping the entire water pipes) after the previous tenant moved out (before finding a new tenant).

Can I report the $15,000 as a one-time rental expense, or do I have to depreciate it over the years? If the latter, which category should I choose to depreciate this renovation?

[KrisD15]

No, you would most likely need to separate the improvements/expenses.

As long as they were done while the property was an active rental, you can address them separately. 

If done before it was active, the total is added to the value of the building. 

If active:

Things such as "painting" are listed as Expenses and deducted in the year they are incurred.

Additional assets are listed and depreciated, although those that cost 2,500 each or less can be deducted in full if you so choose. TurboTax will offer that option to you. 

Anything connected to the property itself, such as flooring or a new roof, that, because you choose to list as an additional asset because they cost more than 2,500 or that you choose to list rather than expense, are reported as a "Rental Real Estate Property" asset. 

These questions are asked when you go through the rental interview.

[manbeing]

@KrisD15Thanks for your reply.

The entire renovation was done after the previous tenant moved out (before finding a new tenant).

In this cases, should I put all $15,000 as the "Rental Real Estate Property" asset?

[KrisD15]

The only issue is if you had it "available", not necessarily if it was occupied. 

If you did the work while it was advertised for rent, separate and claim

 the costs. 

If you suspended the activity, add (SOME OF) the costs to the value of the building. I say "some of" because maintenance, such as cleaning and painting are lost if done to the property while the property was not an active rental. To be an active rental, it needs to be "looking" for a tenant. 

If you're wondering if adding to the value/basis, or claiming in full if under 2,500 is more advantageous, look at your full tax picture.  Consider "Do you want to claim it all in one year or spread it over several years?" Some assets have different depreciation periods. 

You need to look at "Will this generate a loss?" "Can I take a loss based on my total income?" 

HERE is a link to a similar question with a great answer by our Champ Carl.