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Sale of Rental Property. Improvements to same property (roof, hvac) were reported as repairs, not assets, in 2013. Can I add them as assets now? How calc depreciation?

Forum|Forum|7 years ago
June 1, 2019
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I sold a rental property in 2018, that I've been renting since 2009.

In 2013, I had a new roof and a new HVAC installed. I mistakenly reported these as repair costs, instead of adding them as "assets".

Now in reporting the sale of the rental property, should I add the roof and hvac as "assets"? If so, how do I calculate depreciation now, even though depreciation on these improvements were not figured into previous years tax returns? Also, under what category should I enter the roof? and hvac? I see options for "land improvements" and "appliances, carpet, furniture"? Would either of these be suitable?

NOTE: I've been using Turbotax for the life of this rental property, so depreciation on the property itself has been summed up over the years, just not on the improvements.

Thanks

TurboTax Premier Mac

Best answer by ScottL1

If the roof and hvac were listed as expenses in 2013 then you have already received a benefit from them now and you cannot add them as assets in 2018. In 2013 your income was reduced by the cost. If they were added as assets then the depreciation would have been deducted over the life of those until the full expense was taken, but since you already deducted the full cost there is no additional benefit.

S

ScottL1Answer

Employee

If the roof and hvac were listed as expenses in 2013 then you have already received a benefit from them now and you cannot add them as assets in 2018. In 2013 your income was reduced by the cost. If they were added as assets then the depreciation would have been deducted over the life of those until the full expense was taken, but since you already deducted the full cost there is no additional benefit.

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lcwhittonAuthor

Is there a penalty for listing the improvements as expenses (in 2013), rather than assets? If so, do I need to submit an ammendment or something to correct the mistake?