Naive tax rental question

[Andrew Shippy]

This is the first year I have rented out my townhouse and have a question about filing and wanted others' thoughts. The home was purchased four years ago as a foreclosure and we made many capital improvements such as brand new kitchen, new laminate and carpet throughout, new water heater, tore down some walls, and the list goes a little longer. 

When filing taxes I have someone close to me saying I can deduct all of those items on this years taxes (even though they were fixed some years back). While someone else is telling me I need to report those improvements as the overall "cost basis" for my property when using deprecation as a deduction. 

I am fairly young and this was my first year having a rental, and I want to make sure I am doing the right/ best possible thing moving forward. I currently use Turbo Tax as my filing system. Any thoughts?

[Linda Weygant]

Originally posted by @Account Closed:

@Michael Plaks

Your opinion.

It's actually not an opinion.  It's the IRS Code.

Expenses incurred PRIOR TO placing an asset in service MUST BE capitalized and depreciated.  There is no option to write off these types of expenditures all at once.

There is some availability to expense items AFTER the asset is in service, but it must conform to the De Minimus Safe Harbor Rules.

The IRS goes to quite a bit of effort to ensure that tax regulation is not just a matter of opinion.