Originally Posted by Michael Booze
Installed tile flooring in kitchen and bathroom of a rental real estate property. Need to know whether class life for depreciation purposes would be 5 yrs. like carpeting, 7 yrs. due to no class life designated, or 27.5 yrs. like vinyl siding and the house itself?
While you can deduct expenses for repairs in the years you incur them, capital improvements like installing new flooring have their costs spread out over their useful lives through a process called depreciation. The depreciation period for flooring depends on the type you install. Most flooring is considered to be permanently affixed. These types of flooring include hardwood, tile, vinyl and glued-down carpet. Since these floors are considered to be a part of your rental property, they have the same useful life as your rental property. As such, the IRS requires you to depreciate them over a 27.5 year period.when you dispose of the rental property, then you must recapture the unrecaptured depreciaiton taken in previous years on your return as ordinary income taxed at 25% if your marginal tax rate is 25% or higher.