According to the irs you can depreciate a rental property if it meets all of these requirements.
How do you depreciate a new roof on a rental property.
How do i report a roof replacement on a rental property.
I will depreciate the new roof bur what happens to the unused depreciation on the old roof.
Report it as an improvement.
I replaced the roof on a rental property which had not been fully depreciated.
As others have noted you must depreciate the new roof as a separate asset.
Since this was purchased 8 years ago accelerated depreciation rules would not apply.
Do i keep depreciating a roof on a rental property which has been replaced before its 27 5 life.
With a normal business that produces active income rental income is passive you would amortize these costs over 15 years.
As with the restoration costs discussed above these costs are in the same class of property as the residential rental property to which the furnace is attached.
But you can t do that with a rental property.
You can begin to depreciate rental property when it is ready and available for rent.
If the property is unoccupied you bring the roof into service when you next lease the rental property.
Depreciation ends after 27 5 years when you have fully recovered the cost of the new roof.
It must be depreciated.
Is it considered an expense.
You also need to remove the old roof from the value of the rental property since you have been depreciating the building and roof as one combined asset up to the point you replaced the roof.
A new roof is considered an capital improvement that increases the basis of your rental property.
See placed in service under when does depreciation begin and end in chapter 2.
Depreciation is a capital expense.
You own the property you are considered to be the owner even if the property is subject to a debt.
Irs law does not allow you to deduct the entire expense of a full roof replacement at one time.
But that is the easy part.
However you can deduct a maximum of 5000 in startup costs in the first year the rental is available for rent provided your total startup costs do not exeed 50 000.
However for anyone that has been directed here from doing a similar search on the tax treatment of a new roof on a rental property a new roof would qualify for accelerated depreciation if the property was put into service after 12 31 2017.
You would create a new asset for the replacement roof with a cost equal to the difference between the total cost and the amount of the insurance reimbursement probably your deductible.
You may have to make adjustment to your tax return if you sell.
