RENOVATIONS:( bathroom, kitchen )

[St0nemason]

Greetings: 

Looking for help on how to deal with $75,000 of renos on a small house  that I rent out.  

These all seem to be CAPITAL in nature. 

Do most folks report such expenditures? And if so, where are they reported? 

And if they are not reported, would this be detrimental when I decide to sell the house?

(I have owned this property for 10 years and this would be the first time I have dealt with such an issue.)

Thanks to all!

[Vanessa A]

Yes, they are reported as depreciable assets. 

Yes, you must depreciate your depreciable assets.  You cannot pick and choose which things to include or not include when it comes to capital improvements.  If you are improving the property, then you would need to walk through the steps to list the new items as assets in the rental section of TurboTax. 

Yes, it would be an issue when you sell the house.  It would add value to the house and basically, the IRS assumes you depreciate the property when you sell the house so they have you recapture the depreciation. If you do not take the depreciation, they still assume you did, so you will still have to account for it when you sell the house.  Basically, it is easier just to add the improvements now.