Yes, you can use both in a single tax year if you qualify. No, regular repairs is an expense and does not have to be depreciated and therefore the DeMinimis Safe Harbor (DMSH) does not come into play.
Examples response:
- You do meet the specific rule for taking the Safe Harbor Election for Small Taxpayers for building capital improvements. Based on this rule you can take the $9,500 as an expense under this safe harbor.
- 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
- Yes, the refrigerator replacement falls under the DMSH expense election since the cost is less than $2,500.
- Yes, the rental repairs are expensed as repairs.
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