Rehab And Taxes
I recently purchased a rental property that I am renovating. Questions ...
1. The previous owners left appliances. Do I need to break these out of the purchase price and depreciate apart from the house, even though they came with the price of the house.
2. I am completely remodeling one of the kitchens, will I depreciate these new applicances on the 5 year rate, or can it just be treated as part of the increased house basis due to remodeling.
thanks, Kevin
1. No. Just depreciate the entire structure without breaking out the appliances. The current value of the used appliances is likely not worth the effort.
2. Is this question unrelated to #1? Now, you are replacing the appliances instead of keeping the old ones in service? If so, start a new depreciation schedule for the new appliances when you put them in service. The rest of your kitchen remodel just increases the basis of the property and the entire basis is depreciated over 27.5 years.
DaveT - for question #2, it is a second kitchen in the house that has to be completely remodeled, and it currently has no refrigerator. Same question for a new laundry room i am putting in, do the appliances go to the cost basis of the property, or depreciated separately.
Start a new depreciation schedule for the new appliances when you put them in service.