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June 6, 2019
Question

Rental house pool was replastered & tile replaced. Can I expense this cost now or must I capitalize and depreciate? I do not understand the rules.Trying to file by Oct 16

  • June 6, 2019
  • 1 reply
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Since the pool structure is not affected, only the surface was replaced, to give it a better look, does it need to be capitalized and depreciated?  Or can it be expensed in a single year. I do not understand the term 'betterment' and how it relates to tax rules. 

1 reply

Carl11_2
Employee
June 6, 2019

It's  property improvement that has to be capitalized and depreciated. Here's the IRS definition of a property improvement, translated to plain English so us common folks can comprehend it.

Property Improvement.

Property improvements are expenses you incur that add value to the property. Expenses for this are entered in the Assets/Depreciation section and depreciated over time. Property improvements can be done at any time after your initial purchase of the property. It does not matter if it was your residence or a rental at the time of the improvement. It still adds value to the property.

To be classified as a property improvement, two criteria must be met:

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.


November 5, 2019

Is it eligible for TCJA 100% bonus depreciation?

Critter
Employee
November 5, 2019

The Act also allows bonus depreciation and a 15-year recovery period for an expanded class of property improvements, such as building interior renovations, roofs, ventilation, heating and air conditioning systems, fire protection, alarm systems, and security systems now qualify as 15-year property.

 

I do not see where this qualifies so it is 27.5 year property and gets depreciated.