Yes, you do add all the costs of purchase and installation to arrive at the total cost of the wheelchair lift. If you are referring to the Safe Harbor Election instead of depreciating it, you can decide based on the information below. Do not enter them as an asset if you choose the Safe Harbor method (see the instructions below).
You must determine if it is an attachment to the structure of the rental home (a capital improvement attachment) or if it's a separate structure.
DeMinimis Safe Harbor (DMSH) election to take the expense in full.
If you determine the wheelchair lift would be considered as a capital improvement to the property and would fall into the Safe harbor Election for Small Taxpayers. These are two different safe harbor methods.
- Rules for this method for capital improvements:
- Your gross receipts, including all your other income, are $10,000,000 or less.
- Your eligible building has an unadjusted basis of $1,000,000 or less.
- The cost of all repairs, maintenance and improvements is less than or equal to the smallest of these limits:
- 2% of the unadjusted basis of your building or
- $10,000
Either or both safe harbor elections would be entered in the rental activity using Miscellaneous expenses if you choose this method.
- Enter your description and amount
Keep close track of these expenses because they will be used to reduce cost basis at the time of a future sale, thereby increasing gain at that time.
