In 2005, I made an improvement to my home (built a deck). I also rent out two rooms in my home. I depreciate the portion of the home rented. Am I required to depreciate the expenses for this home improvement? Or is depreciation on home improvement optional?
Thank you

No, you are not required to claim the depreciation for the cost of the home improvements.

However, when you sell the house and have to recapture the depreciation you have claimed, you will have to recapture the depreciation of the home improvements as well, even though you did not claim the depreciation to begin with.

This of course pre-supposes that the rent you are collecting exceeds your expenses, to include depreciation. If so, continue as you have.

If, however, the depreciation on the home improvements puts you in a negative cash flow situation, you will need to either raise the rent to get back in positive cash flow or cease claim the rental income and expenses on Schedule E.

I suspect that is the basic reason for the question to begin with?

Thank you for the response Atlanta Tax Expert. I have a follow up question. I rent out a portion of my home (two bedrooms and a bathroom). Since the home improvement (a new deck) is not a portion of the home that I rent, would it even qualify as being depreciable?

Yes, since it is part of the overall structure.

Of course, I assume you are pro-rating the depreciation based on the square footage of the rooms and bathroom being rented. If so, the percentage that you are using to determine the appreciation amount is the percentage you would use when depreciating the deck.