Remodel, Invoiced, Depreciated, No Contractor to pay?!?

Forum|Forum|2 years ago
March 25, 2024
1 reply
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Last September I had a rental unit remodeled and the contractor invoiced me for a little over $14k.

The contractor never gave me a W-9 and has since disappeared.

The property was placed into service on October 1, 2023.

Without payment, nor even knowing when payment will be accepted, do I start the depreciation last October, do I start once payment has been rendered after W-9, or am I just losing out on this depreciation until I someday can pay him?

TurboTax Home & Biz Windows

Best answer by DavidD66

You should place the improvements in place and start depreciating the cost as of October 1, 2023. I think you can reasonably assume that the contractor will reappear and want to get paid.

DavidD66Answer

You should place the improvements in place and start depreciating the cost as of October 1, 2023. I think you can reasonably assume that the contractor will reappear and want to get paid.

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mgc6288Author

Ok. He also remodeled a second unit but has never invoiced me for it but I do have the estimate in writing for a little over $15k.

I could use the estimate but if his final number is different then I'm in trouble.

If I choose not to depreciate until he actually notifies me the amount by invoice then is this first year lost or do I just start the depreciation from when I found out the final balance? Unit has been in service since November.

PatriciaV

Employee

As DavidD66 said earlier, use the estimated cost for the renovation and begin depreciation on the date the unit was placed in service. If the contractor comes back with a different number that you actually pay, you can add another improvement asset to cover the difference.

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