Remodeling Condo and Converting condo to rental over 2022 and 2023

[jntmuller]

The condo was remodeled in 2022 and 2023. It was rented in 2023. How do I account for the assets purchased for the conversion? New sink, doors, bath, fixtures, kitchen appliances, etc....

Thanks!

[Bsch4477]

The expenses are capital improvements and are depreciated. 

[AmyC]

Remodeling expenses prior to rental go into the basis of the unit. For example, you purchased the condo for $100,000 and then spent $30,000 on remodel and upgrades. before renting. Your new basis is $130,000 and that would be reported for depreciation calculations. 

Remodeling expenses made after rental are separate assets. For example, your rented unit has the roof collapse and you add a roof for $10,000. Then, the roof will be a separate entry for depreciation. Meanwhile, small items for upkeep like a light bulb or cleaning supplies, will be deducted as an expense. 

For full details, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes)