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jntmuller
New Member

Remodeling Condo and Converting condo to rental over 2022 and 2023

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!

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2 Replies

Remodeling Condo and Converting condo to rental over 2022 and 2023

The expenses are capital improvements and are depreciated. 

AmyC
Employee Tax Expert

Remodeling Condo and Converting condo to rental over 2022 and 2023

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)

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