tax deduction for for items brought separately from renovation

[Linda M.]

I purchased a multi unit property ,the  renovation was included in the mortgage my question is ,when it is asked on the tax for depreciation the purchase price do i use the sale price of the property or do i use the sale price and add the renovation price , also in addition to that I brought kitchen cabinets and counter tops and had them installed by the contractor who was doing the scope of work in the renovation loan , are the cabinets and counter tops an improvement or are those items supplies, because they were not a part of the scope of work and were purchased separately on my credit card

[Yonah Weiss]

@Michael Plaks and @Ashish Acharya Thanks for pointing this out. We regularly treat capinets and counters as 5-year 'personal property'. Below is a direct citation from one of our recent reports on a strip-mall with office suites. Important to note, in all of the 10,000+ studies my company has conducted, there have been a handful of clients who have been audited (for other reasons) and ALL of our studies have been no-change.

"Cabinets, Counters and Shelving - These items qualify as tangible personal property because they meet the definition in Reg. Sec. 1.48-1(c). The Senate Finance Committee Report on the Revenue Act of 1978 identified similar items, such as booths for seating and beverage bars, as tangible personal property. In Metro National Corp. v. Commissioner, No. 33279-84, TCM 1987-38, cabinets were found to be tangible personal property. The cabinets were easily movable and there was no damage to the cabinets or to the building structure. In Morrison Inc. v. Commissioner, No. 34300-83, TCM 1986-129, March 31, 1986, the court disallowed vanity cabinets and counters in public restrooms. However, these items were disallowed because they were considered a necessary part of the public restrooms and thus, necessary in the operation and maintenance of the building. Also, the record noted that the vanity cabinets and counters were attached in such a manner that removal would damage the underlying walls. The subject cabinets, counters, and shelving are not permanently attached to the walls and are not necessary in the operation and maintenance of the building. Rev. Rul. 75-178, 1975-1, C.B. 9 Tax Justifications 1 of 8 SECTION 1245 PROPERTY JUSTIFICATIONS for (this property) concludes tangible personal property based on (1) the manner of attachment and (2) the degree of permanence. As discussed in Hospital Corporation of America v. Commissioner, 109 T.C. No. 2 (1997) and Rev. Rul. 67-349, 1967-2 C.B. 48, floor and wall coverings installed in a manner so as not to be a permanent covering of the floor or wall qualify as tangible personal property. These rulings held that if the floor or wall coverings are not an integral part of the floor or wall, they could not be considered a structural component of the building. Similarly, the cabinets, counters, and shelving items reflected in this report are not integral parts, nor permanent coverings, of the structural components of the building. Rather, all of these items can be easily removed without sustaining damage and without affecting the structural integrity of the building."