Part Rental and Owner Occupied - Repairs

[Absolut]

Owners bought a old house, did extensive repairs, and they are renting 3/4 of the house out. Should the following repairs be Capitalized and Depreciated?

Electrical - cost $10,150.00 to bring it up to Code.
Painting - Exterior & Interior = $13,277.00
Plumbing - $11,468.00 to bring up to Code
Other Repairs - $11,084.00 (which I've asked for a better explanation on what they are).

I know I need to allocate part to the rental an part to personal use, but for I'm wondering what has to be depreciated. Thank you for your help.

[Gretel]

I assume the purchase price was low to allow for these expenses. If this is the case all remodeling expenses need to be capitalized.

[Brian EA]

Owners bought a old house, did extensive repairs, and they are renting 3/4 of the house out. Should the following repairs be Capitalized and Depreciated?

Electrical - cost $10,150.00 to bring it up to Code.
Painting - Exterior & Interior = $13,277.00
Plumbing - $11,468.00 to bring up to Code
Other Repairs - $11,084.00 (which I've asked for a better explanation on what they are).

I know I need to allocate part to the rental an part to personal use, but for I'm wondering what has to be depreciated. Thank you for your help.

I would assume all the repairs were done before you started to rent th house.
All the expenses are added to the cost to form a new basis which is used for depreciation.
Depending on the software you use you will allocate your expenses.eg I use drake software and there is a box that ask for the %age of the rental. You will list all your expenses at 100% and then put 75% in that box.
As for the depreciation you will not use the proration but instead the actual basis of the rental part which is 75% .Let us say the basis is 100000; you will use 75000 as your basis; not 100000 x 75 %.
I hope this helps

[Absolut]

Rental & Owner Occupied - Repairs

No, they pruchased the house for $209,000.00. It's over 100 years old, and I believe they've actually registered it with the historic society.

[Absolut]

Rental & Owner Occupied - Repairs

Actually there were renters in there while they renovated. They did one room at a time, and the renters moved from each room as completed. I was told the painting can't be capitalized, is this true?

[Bees Knees]

There is no black and white answer here. It is facts and circumstances. I suggest that you read TTB, page 7-5 under the heading "Repairs vs. improvements."

[Matt Sova]

Repairs v. Improvements

The painting should be expensed. I feel this is a maintenance item. As far as the electric and the plumbing goes at first I was on the fence because you stated it was to bring it up to code. So part of me was saying repairs, because you could not rent it without completing the repair (kind of like having to replace the roof). Then you stated that there are already renters in the house so now I am thinking capitalize the electric and plumbing.

Matt

[JON]

Exclusive use

Unless separate areas the % used for rental is only that portion exlusively used by rentors. Living romm, Kitchen etc if used by the owner is not part to be depreciated. % rented has nothing the number of renters has only to do with what areas are exclusively used by renters.

[Mark Goldberg]

My view

Plumbing and electrical depreciate
painting expense
other depends

[Absolut]

Thank you everyone for you help.