Upgrade My House, Then Write Off the Depreciated Value?
September 6th, 2009Am I allowed to upgrade my house, then use the depreciated value as a tax write-off when I rent it out later?
I own a duplex, and live in one half while the other half is rented out. The Bathrooms on each side need to be remodeled. I would like to both rooms the same, costing quite a bit per room. Do I need to enter this (using Turbo Tax) as a depreciated value each year? And can I claim ‘zero use’ for my Bathroom, then change it to 100% later?
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Some assumptions- You are currently renting out space #2, but are considering renting out space #1, where you currently live, in the future.
The bathroom improvement would be a depreciable addition for space #2. For space #1, the improvement to your own home would be an increase in your basis in the property. If you ever sell the duplex, this will offset the gain, if applicable. If you decide to rent out space #1 in the future, you can depreciate your basis at that time.