Depreciate/Write-Off Carpet Replacement

[tn0087]

We recently had an 'incident' in which a corner of our living room carpet was damaged by one of the daycare children. We plan to replace the carpet completely; however, it is a scenario where the stairs, hall, and living room carpet must be the same. Can this be deemed a repair as the carpet was damaged by a child in our care under the business?

We will also be replacing the carpet in to 3 additional rooms used for daycare (just want to do it all at once). If the living/stair/hallway does qualify as a repair, would I then do a percentage break-out and claim the 3 additional rooms as a depreciable (as it's a home improvement)?

Thanks!
Tim

[TomCopeland]

Carpet

Good news. Carpeting is treated a "personal property" that is normally depreciated over 7 years. There is a 100% bonus depreciation rule for 2011 that says that any 7-year property can be deducted in one year, rather than being depreciated. So, multiply the cost of the new carpet for all the rooms used for business and personal use by your time-space % and deduct it in one year on Form 4562, line 14. If the carpet is only used for your business, deduct 100% of the cost on the same line. See my article on this:http://www.tomcopelandblog.com/2011/...-big-deal.html

This rule is only for new carpet you buy in 2011. The rule in 2012 will be that you can deduct 50% of the cost in one year and depreciate the rest.

Also, if you hadn't fully depreciated the old carpet you are replacing, you can deduct all the remaining years of depreciation in the year you replace them.

[tn0087]

That's great news! Thanks for the quick response as always!!!

Tim