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LMM
Visitor II

residential rental improvement

Renovated a rental residential property, which was rented throughout the reno period. All work was completed in 2017 but final payment install was made in 1/2018 due to accounting delay by company. Can I claim pyt made in 1/2018 on the 2017 depreciation schedule when work was completed?

1 Comment
Catalyst V

residential rental improvement

 Basically as I understand your post, you have what is classified by the IRS as property improvements. Property improvements are not deductible per-se. They are capitalized and depreciated over time. Here's the definition of a property improvement.

1) The improvement must become "a material part of" the property. For example, remodeling the bathroom, new cabinets or appliances in the kitchen. New carpet. Replacing that old Central Air unit.

2) The improvement must add "real" value to the property. In other words, when the property is appraised by a qualified, certified, licensed property appraiser, he will appraise it at a higher value, than he would have without the improvements.

Now property improvements are entered in the assets/depreciation section of the program and end up on IRS Form 4562 as a part of your tax return. They are depreciated over time - generally 27.5 years for rental property.

So when you paid for it really doesn't matter. What does matter is when the property improvement was placed "in service". Depreciation starts on the in service date, not the day you paid for it.