Buy and Hold Remodel - Add to cost basis or operating expense?

[Terrell Garren]

I am a buy and hold guy. Around 14 SFHs, annual gross around $120K and net around $30K. Just completed a SFH remodel to be rented. Purchase was $72K and upfit was $27K.

Do I have any leeway and any recommendations regarding tax strategy E.g. Leave the capital cost basis at $72K and write off the $27K as operating expense?  Or increase the capital cost basis to $99K for higher annual depreciation?  Or pick the true capital items (roof, HVAC) to add to the cost basis and expense the rest?

So you are thinking, what did I do the other 13 times.  See 5th Amendment. 

[Cody L.]

I can tell you what I do.

I never change the cost basis. What I pay is my cost basis, period.

I used to try to keep track of capital expenses versus repairs but when you have hundreds of units and you have employees going to Home Depot every other day, trying to keep track of what on everything or receipt might be what category, or try to set up a depreciation schedule for 10,000 different things would be impossible

I just come up with a percent that's conservative yet fair
.
I consider X percent of my total materials and labor to be capital the first year, and a smaller percentage to be capital the second year until it finally stabilizes for year 3 on.

This is another part of our tax code that I find disgusting. If a big company wants to depreciate something to make their books look better for Wall Street or investors, that's fine. But for tax purposes if I buy a stove I don't want to have to keep that thing on my books for 10 years as a depreciate. I want to consider it an expense and be done.