Is it worthwhile to depreciate repairs and improvements made before renting?

Forum|Forum|2 years ago
October 8, 2023
1 reply
0 views

I converted my main residence into a rental property last year. Because of the mortgage, property tax, and necessary depreciation, it is anticipated to incur losses for the next few years, until either the interest portion decreases or the rental income rises in the future. I conducted repairs and enhancements before renting it out. Considering the anticipated loss and recapture, is there any advantage to depreciating them, especially over the standard 27.5-year period?

DoninGA

Employee

Repairs are never depreciated.

On the date you place the property into service as a rental it is depreciated over 27.5 years based on lessor of the Fair Markey Value of the property or the purchase price of the property plus the cost of any improvements prior to the date placed in service.

delvalleAuthor

Thank you. My expenses include kitchen and bathroom remodeling, attic insulation, gutter installation (replace with new one), and replacing some floors. Are these considered improvements? If they are, given the anticipated loss and recapture, does it make sense to simply ignore all these costs?