How Do You Depreciate Additions and Improvements?
When you add to or improve your rental property, you must separately depreciate the new structures or components. Examples of additions or improvements might include adding a new room, replacing the roof, remodeling, replacing appliances, adding fences or other structures, or installing new plumbing or wiring.
Interestingly enough, certain changes to the land itself can be ignored, including grading, clearing, excavations, and landscaping. However, the recovery period for these is 15 years.
Figuring out which work constitutes an improvement and which constitutes a repair can be tricky—and it is in your interest to classify as much as possible of the work as repairs so that you can immediately deduct their costs. You can plausibly claim that some parts of a project are repairs and some are improvements. For example, you might have your kitchen floors redone after the dishwasher floods (a repair) and also install a new dishwasher (an improvement). See the list of examples of improvements below.