Rental roof replacement and other repairs

Forum|Forum|1 year ago
February 27, 2025
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Hello, this is regarding my rental condo in Michigan and I have the following two questions:

Q1. The condo association shared the that $2580 paid in 2024 were towards roof repair, hot water tank storage tanks, gates/pillar repair. I have included this amount under Any Miscellaneous Expenses; is this the correct place?

Q2. My rental condo's roof was replaced in 2021. Tax & Accounting Consultant had advised that roof replacement payment of $2967 would be amortized over 27.5 years instead of being expensed all in 2021. While doing 2024 taxes, I realized that I had missed including this expense in 2022 and 2023. Can I include these along with my 2024 expense (separate line by year) under Any Miscellaneous Expenses ? see enclosed attachment

gulsheenkAuthor

A gentle reminder for the questions above, please

DianeW777

Yes, miscellaneous expense can be used for the expense shared with the condo association since it appears all are repairs and not replacements.

Yes, you can include the new roof assessment paid in 2021 for the tax years you missed the depreciation. However the IRS does have a specific plan of action for that. Please see the instructions below which will allow you to claim it in 2024 without amending the prior year returns.

First add the roof replacement assessment as a capital improvement in your assets for your rental with the correct date placed in service (2021), i This will provide the correct amount of depreciation for the current year and all future years. The chart for 27.5 year property is added below and can be found in IRS Publication 946.

Next, for the prior depreciation you have not used. At the point of sale, you will recapture any depreciation that was allowed or allowable.

You can use the following form to correct the depreciation for your rental property. Take any amount not previously expensed on prior returns, as an expense on the current year tax return as 'Other Expenses'.

Form 3115 Instruction: By including this with the current year tax return, you can complete everything on the 2024 tax return.

Adopt a change in accounting method: This option allows you to go back as far as you need. Make the adjustment on your current year tax return to expense the missing depreciation.
- Why am I adopting a change in accounting method? Not claiming depreciation in two or more years indicates that you've chosen an accounting method without depreciation. In this case, you must now elect to change your accounting method to include depreciation.
This form is available in both TurboTax Online and TurboTax Desktop. TurboTax doesn't help you with this form. And your return must be mailed because this form is not supported through e-file.

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gulsheenkAuthor

Hi, @DianeW777 , thanks a bunch for your comprehensive response.

In 2021, a certified accountant had filed my taxes and had shared the note, "Because it is a roof replacement and not a repair it will need to be capitalized and expensed via depreciation over the 27.5 years instead of being expensed all in 2021. Because the payment was made late in the year in December only $8 is deductible for 2021. The rest will be deducted around $107.89 for the next 27.5 years. " So, based on this, I am all set for 2021. As mentioned in my earlier message, I had missed including these expenses when filing taxes for 2022 and 2023.

I am confused why I need to complete the Form 3115, which is "Application for Change in Accounting Method for automatic and non-automatic change requests." Please explain.

If I do need to complete the form 3115, please share, how I can initiate this form within ongoing TurboTax filing. Thanks again!