Depreciation Of Flooring

Carpets are normally depreciated over 5 years.* This applies, however, only to carpets that are tacked down. If the carpet is glued down (perhaps in a basement) then it becomes “attached” to the property and must be depreciated over 27.5 years.

Most other types of flooring (i.e. tile, hardwood, linoleum), unlike carpeting, are usually more or less permanently attached when installed. This needs to be considered when re-working floors as these “attached” flooring types will have to be depreciated over the much longer 27.5 year period. If the idea of paying several thousand dollars for new flooring without the ability to write off the cost in a short time frame is unappealing then tacked down carpet (with its shorter 5 year depreciation schedule) should be strongly considered.

*Keep in mind that if you install carpet as part of a pre-rental renovation, it will have to be capitalized and depreciated of [Read More]

July 10th, 2015|Articles|

Fundamental rules of depreciation for United States Property

  1. Residential buildings (dwellings, apartment buildings, condominiums, and co-op apartments) must be depreciated over 27.5 years.
  2. Land is not depreciable.
  3. Furnishings may be depreciated over 5 years. When or if they are junked before the end of 5 years, with no dollars received, the un-depreciated cost may be deducted in the year of disposition.
  4. Paint jobs generally are a current expense, irrespective of how much one costs, unless they are part of a remodeling, or are incurred before the property is put in service. In those instances, painting must be capitalized.
  5. The regulations state, and give as an example; a refrigerator is a depreciable asset. However, it seems that in IRS audits, they will accept what is done in industry in general, and allow an expenditure of $500 or less (for an appliance for example) as a current deduction.
  6. Generally, the costs of looking for property to acquire aren’t a current deduction, but must be capitalized [Read More]
July 10th, 2015|Articles|