Non-Depreciated Investment Expenses
There is a list of ongoing expenses that is updated each year by the IRS that showcases what is and is not allowed for property depreciation. Certain types of insurance premiums like fire or mortgage cannot be added to the annual depreciation schedule. Fees paid for credit checks or appraisals that are required by lending institutions are included in the non-eligible list.
The type of schedule used each year in hopes of reducing annual taxes is based on how the home is used. The MACRS type was introduced after 1986 and is the one most commonly used for investment property owners who are eligible for house depreciation. A property class is generally assigned under MACRS to make certain that the correct year of termination can be used under a schedule of depreciation.
Appliances and Amenities Depreciation
Computers, stoves, carpeting, fencing and other types of amenities that are placed into a rental property could be depreciated based on the year of purchase. The general system in place setup by the IRS provides specific years to different types of appliances or additions to a home. The average length in years for depreciation is between 5 and 15 years for most types of inclusions inside of a property used as a rental.
Land costs are generally excluded from any type of rental home depreciation unless certain types of upgrades are paid for. A landscaping charge or leveling of the property could be written off under certain circumstances to reduce out of pocket expenses. A good tax accountant or real estate attorney could provide more information about what is excluded from land maintenance depreciation.