how and where do i deduct improvements to my rental house?

Question

Short version: Began renting out my home in 1997. ( we were still paying for it.) Looked back at taxes prepared for that year and CPA set $55,316 as basis for depreciation. We actually had done many thousands more improvements to the property. (at least $20,000) and for some reason he did not include those. What can I do? Where on tax forms do you even LIST improvements you make ? can I change the basis for depreciation?

Answer 1

You list each improvement as a separate asset, with the same life as the house itself, 27.5 years, and depreciate them individually. You take the total depreciation expense each year.

You can amend the returns from 2003 (but you'll have to do THAT one today!) onwards and get any refund due. You probably should do that as the depreciation will be recaptured when you sell whether you take it or not -- the term being "Depreciation allowed or ALLOWABLE" on the recapture.

But make sure that he didn't expense any of the improvements. It's pretty common to expense moderate cost improvements such as a new AC unit or dishwasher. Anything like that that was expensed can't be depreciated.