There are two elections afforded by the IRS. The first is the de minimus safe harbor, but there is also an improvements election. If you meet the qualifications, you can expense them.
Improvements Election
This election is an option you can take each year that lets you write off some building improvements as expenses instead of assets.
Here are the rules you need to meet to take this election:
- 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
This election for building improvements is called the Safe Harbor Election for Small Taxpayers. If you decide to take this option, a form called Safe Harbor Election for Small Taxpayers will show up in your tax return. This election will apply to all your businesses, rental properties or farms.
