Capital expenses are a key part of real estate investing. Stessa makes it easy to track them for accurate reporting, depreciation schedules, and streamlined tax prep.
What Are Capital Expenses?
Capital expenses are long-term investments in your property, like a new roof, HVAC system, or flooring. They must be depreciated over time instead of deducted all at once. Unlike regular operating expenses, capital expenses need a few extra details for proper reporting.
How to Add a Capital Expense
You can add a capital expense manually or by editing an imported transaction.
Option 1: Manual Entry
Go to your Transactions page.
Click the + Add button.
Enter the transaction details and choose a Capital Expenses category.
Option 2: Edit an Imported Transaction
Hover over the transaction.
Click the pencil icon at the far right.
Change the category to Capital Expenses or one of its sub-categories.
Required Fields for Capital Expenses
When you select a Capital Expenses category, two additional fields appear:
Date Placed in Service: The date the asset was ready for use by a tenant.
Useful Life: The expected depreciable life of the asset per IRS guidelines (Publication 527, see Table 2-1 on page 9). Examples:
Appliances: 5 years
Fences, roads: 15 years
Most building improvements: 27.5 years
Tip: Use the regular Date field to track when the payment was actually made.
Pro tip: Talk to your CPA about safe harbor provisions or bonus depreciation. Some capital expenses may qualify for full write-offs in the year they’re incurred.
Generate a Capital Expenses Schedule
After entering your capital expenses:
Go to the Transactions page.
Click the Reports button.
Select the Capital Expenses Schedule report.
The report includes one row per capital expense, with the Date Placed in Service, Useful Life, and other transaction details.
Note: The Capital Expenses Schedule always includes all capital projects, regardless of date, since depreciation can span multiple tax years. You can also access this report through the Tax Package when preparing your year-end documentation.