Rental depreciation

Forum|Forum|7 years ago
June 1, 2019
1 reply
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I paid my father-in-law to do maj repairs and improvements to my rental property in 2016 however the work won't begin until January 2017. Can I still claim the lump sum depreciation for 2016 since that is the year the purchase was made? Simarllaly what if work and payments goes across the tax year? Is this a gray area of tax code law in which I can claim either years as long as I only claim one year?

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Best answer by DianeW777

This is not a gray area. When the improvements are complete, this is the date the improvements would be considered "placed in service" or "placed in use". Assets begin depreciation options and deductions on the date placed in service.

For example, if new appliances were installed depreciation begins on the date they can first be used. On the other hand if you are doing renovations such as a new roof, the roof depreciation begins when it is complete.

Since the actual work will not begin or be completed until 2017, the depreciation will begin in 2017.

D

DianeW777Answer

This is not a gray area. When the improvements are complete, this is the date the improvements would be considered "placed in service" or "placed in use". Assets begin depreciation options and deductions on the date placed in service.

For example, if new appliances were installed depreciation begins on the date they can first be used. On the other hand if you are doing renovations such as a new roof, the roof depreciation begins when it is complete.

Since the actual work will not begin or be completed until 2017, the depreciation will begin in 2017.

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