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Community Contributor *

What is the best way to setup simple start for rental property?

I want to start using quickbooks for my rental properties.  I have several properties that are over 10 years old.  I want to make sure that I am entering the correct information for capital improvements and depreciation.  Can you please tell me if this is correct? 

Depreciation= Total depreciation taken since the time of purchase of (initial building value & capital improvements)

Capital improvements= Total of initial rehab + any capitalized expenses from each year

 

Do I need to make a separate entry for each capitalized expenses for the past 10 years I have owned the property or can I do a single journal entry for all 10 years combined? If I have to sinlge out each capitalized improvement, it seems like I will have a large number of Journal entries. Anyway to simplify this?

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Re: What is the best way to setup simple start for rental property?

Capital improvement as far as the IRS is concerned is a major change to the underlying asset which extends the useful life.

 

the cost of that improvement, if made after the asset was placed in service, is listed as its own fixed asset and is depreciated using the same schedule as the parent asset, with a starting date of the date the improvement was completed.  If that improvement was made to the property before you placed it in service then those costs are an addition to the property basis (cost)

 

Repairs are not capital improvements, they are an expense at the time they are paid for.

IRS pub 551, page 5, table 1

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