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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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I have a rental property. It is a house single

Customer Question

Hello, I have a rental property. It is a house for a single family located in Houston TX. Recently I made some repair work and replaced appliances and now question how I can treat it for tax purposes. 1. I replaced a shower with a new one and it cost around
$4,000. Question- can I expense it against rental income in that year? 2. If the shower should be capitalized how I should depreciate it? Separately or it can be added to the cost of the house. If added to the cost bases of the house, should it be depreciated
over the remaining period? 3. I replaced, fridge, microwave and dish washer- how that should be treated? Expense or capitalized separately or within the house cost? 4. In general what is the term I should depreciate the house- 27.5 years under MACRS? Thank
you, Grigory
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
Hi and welcome to our site!I will separately address all your questions. Let me know if any clarification needed.1. I replaced a shower with a new one and it cost around $4,000. Question- can I expense it against rental income in that year?A.Based on information you provided - that is a capital improvement and may not be immediately deducted.Improvements for the rental property are depreciated the same sway as the property..2. If the shower should be capitalized how I should depreciate it? Separately or it can be added to the cost of the house. If added to the cost bases of the house, should it be depreciated over the remaining period?A.Improvements are depreciated as separate item using teh same depreciation period and depreciation method as the property to which improvements are made.Thus for residential rental property 0 that improvement is depreciated over 27.5 years starting the date when it was placed in service (completed).3. I replaced, fridge, microwave and dish washer- how that should be treated? Expense or capitalized separately or within the house cost?A.These items are NOT permanently attached to the real property and depreciated over 5 year period. These are eligible for section 179 depreciated - so potentially may be deducted in the year they are placed in service..4. In general what is the term I should depreciate the house- 27.5 years under MACRS?A.Yes - correct.Please be aware that we need to separate the land and the building. The land is NOT depreciated. But the building that is used as a residential rental property is depreciated over 27.5 years. See page 73http://www.irs.gov/pub/irs-pdf/p946.pdfTable A-6. Residential Rental Property Mid-Month Convention Straight Line—27.5 Years