Rental

Forum|Forum|1 year ago
January 31, 2025
1 reply
19 views

I have a rental. I want to know if I have to depreciate or expense improvements. Can I just add them to the basis of the rental when I sell the property.

DawnC

Level 15

Capital improvements that add to the value of your rental property, prolong its life, or adapt it to new uses must be depreciated over a period of time rather than deducted as a current-year expense. Examples

To enter your rental improvements, simply follow the directions to enter your rental income and expenses. At some point you'll come across the Here's [your property's] rental property info screen. Under Expenses / Assets (Depreciation), select Add expense or asset and follow the onscreen instructions.

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tunktwoAuthor

Level 2

Do I have to expense or depreciate them? Can I just not include the improvements until I sell the property, then add them to the basis? I don't want to depreciate them because then I have to recapture some of the depreciation. I couldn't find any tax law on this.

DawnC

Level 15

You have to recapture the depreciation whether you take it or not. Once a depreciable asset is sold, bartered, discarded, or destroyed, the transaction is reported on your tax return. The reportable amount is determined by the asset's original basis, accumulated depreciation, as well as any value you got in exchange for the asset and any expenses involved in selling or disposing of the asset.

The De Minimis Safe Harbor election lets you deduct the full cost of items worth $2,500 or less, instead of depreciating. You can also use the Safe Harbor Election for Small Taxpayers to expense the cost of improvements to business buildings if you qualify. These elections are available for Schedule C businesses, rentals, farms, and farm rentals.

For instructions on claiming the De Minimis Safe Harbor Election in TurboTax, click on this link.

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