What is the proper tax treatment of capital improvements for a residential or commercial rental property?
A)IRC section 179 may be claimed.
B)Can be deducted as ordinary expenses.
C)Must be depreciated using the double-declining balance method.
D)Must be depreciated using straight-line over 27½ or 39 years.

Question

Quizplus · Accepted Answer

Capital improvements made to a residential or commercial rental property must be depreciated over a period of 27.5 years for residential properties or 39 years for commercial properties using the straight-line method. This means that the cost of the improvement is deducted gradually over the useful life of the property, rather than in one lump sum. IRC section 179 applies to eligible property that is expensed in the current year rather than depreciated, but it does not apply to capital improvements to rental properties. Capital improvements cannot be deducted as ordinary expenses because they are considered to add value to the property, rather than simply maintaining its current value.

What Is the Proper Tax Treatment of Capital Improvements for a Residential