Stessa handles capital expenses just like other regular operating expenses, with a few key differences. Once you understand the nuances, you'll be able to create a Capital Expenses Schedule to see all your projects in one place and help you prepare for tax time.
Here's a quick demo video of Stessa's Capital Expenses features:
Add Capital Expenses on Your Transactions Page
To record a new capital expense, simply navigate to your Transactions page and click the "+ Add" button to create a new transaction manually. If you've connected a bank or credit card account, you can simply edit the imported transaction by clicking on the blue edit that appears at far right when you move the cursor over the line item.
Once you set the category to "Capital Expenses" or any relevant subcategory, you'll see two new data entry fields appear: Date Placed in Service and Useful Life. The Date Placed in Service is the date upon which the project was ready and available for use/enjoyment by an existing or hypothetical tenant. Useful Life is the expected depreciable life of the asset, and is generally governed by IRS guidelines per Publication 527 (see Table 2-1 on page 9).
Use the regular Date field to keep track of when the capital expense was actually paid.
Appliances are generally depreciated over 5 years, fences and roads over 15 years, and most other capital expenses are assigned useful lives of 27.5 years. You'll want to check with your CPA before making final tax decisions as some capital expenses may be eligible for various safe harbors and/or bonuses that allow the full amount to be written off immediately.
Generate a Capital Expenses Schedule
Once you've inputted all your capital expenses, use the "Reports" button on the Transactions page to generate a schedule of all capital expenses incurred to date. This schedule shows one capital expense per row and includes Date Placed in Service, Useful Life, and other important information for each expense. Note that when included alongside other reports via the Tax Package feature, the Capital Expenses Schedule will always include all projects regardless of date. This is because capital expenses (and the associated depreciation expense) often impacts years well outside of the calendar year in which the original expense was incurred.
Still Have Questions About Capital Expenses?
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