Can I use Safe Harbor de minimis election for water heater less than $2500 on an amended return?

[meg53181]

I bought new HVAC and water heater for my rental in 2019 and reported them incorrectly on Sch. E in 2019 as expenses, instead of depreciating.  I am going to amend my return and want to know if I can elect to use the Safe Harbor de minimus election for the water heater on that amended form?  I will depreciate the HVAC correctly.

[HelenC12]

Yes, you can use the safe harbor election to expense the water heater since it is less than $2,500 and you use it in your rental, in 2019.

The safe harbor election lets you deduct your items as expenses instead of depreciating them over the life of the item. Expenses typically reduce your income by a larger amount than depreciating as an asset over a number of months or years. This means you could get a bigger refund.

Additional information: What can I expense or depreciate with the business safe harbor election?

[meg53181]

Thanks! I guess my big concern is can I claim that election if I am amending the 2019 filing? I’m seeing some conflicting information online. I want to fix what I did incorrectly and make sure I can do it. 

[Anonymous_]

@meg53181 

Read Section 1.263(a)-1(f)(5) (link below). The election needs to be timely filed and, ostensibly, the consent of the Commissioner is needed before filing an amended return.

https://www.law.cornell.edu/cfr/text/26/1.263(a)-1

[meg53181]

That’s something I’ve seen and why I’m concerned. 

is there anything wrong with just amending and considering both things as depreciating assets and not using the safe harbor exception? Does that also need approval? 

[Anonymous_]

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@meg53181 wrote:

is there anything wrong with just amending and considering both things as depreciating assets and not using the safe harbor exception? Does that also need approval? 

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No, that would not need approval (nor any special form) since you are amending the immediately previous tax year.

[meg53181]

Okay thank you. The water heater doesn’t make a huge difference in my refund or lack thereof and if it just makes it easier I think I’ll just amend 2019 to show both as assets to depreciate and not use the Safe Harbor election.