"expensing" New Carpet
Typically, when you replace all the carpet in a property, you have to capitalize it and depreciate over 5 years. However, I think I have an idea that would allow to to pretty much expense it all in the year it is replaced.
Suppose you bought a property, carpet looks good, clean and so forth. You can call the existing carpet personal property and not a structural component as long as it is tacked down, not glued. If the carpet is new or fairly new and I would think that a clean, decent quality carpet of unknown age would qualify as "fairly new" for the purposes of a 5 year depreciation, then you can use the replacement cost of the carpet as its basis and depreciate it as a separate component over 5 years instead of 27.5. Next suppose that your first tenants (or their pets) destroy the carpet in the first several months then move out - this happened to me. You replace the carpet with new, but since the old carpet had not had any depreciation deducted from its basis yet, the disposal of the undepreciated asset creates an expense that is equal to the cost of the new carpet. And you still have the new carpet to depreciate over 5 years.
Sound reasonable?
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