how complicated does depreciation need to be?

[Eric Littlepage]

I'm doing my taxes for 2017 now.  I've had a duplex since 2012, with tenants in it since 2013.  2017 was a particularly rough year--my property management company has recorded $5700 of repairs that were done, and in between tenants I performed another $1900 of repairs and upgrades (new cabinets).  I hate dealing with depreciation and determining what is a repair (usually is) vs. improvement, but it looks like I need to capitalize this if repairs are more than 2% of the basis.  So, if I need to capitalize all this, I'm wondering how to make this simpler--can I lump them all into one capitalization for 2017?  Or does each month need its own schedule?  Or every purchase?  I have 20 receipts to Home Depot for the year...

[Ashish Acharya]

Originally posted by @Eric Littlepage:

I'm doing my taxes for 2017 now.  I've had a duplex since 2012, with tenants in it since 2013.  2017 was a particularly rough year--my property management company has recorded $5700 of repairs that were done, and in between tenants I performed another $1900 of repairs and upgrades (new cabinets).  I hate dealing with depreciation and determining what is a repair (usually is) vs. improvement, but it looks like I need to capitalize this if repairs are more than 2% of the basis.  So, if I need to capitalize all this, I'm wondering how to make this simpler--can I lump them all into one capitalization for 2017?  Or does each month need its own schedule?  Or every purchase?  I have 20 receipts to Home Depot for the year...

1) 2% rule is not correct. 

2) if the asset was not placed in service when being repaired, the capitalized building improvements  may be lumped together and depreciated when asset is placed in service or just added to the basis of the Building 

3) if improvements are done while it was rented, you have to separate Improvements/assets by months for correct depreciation.