@bohemiafan1 wrote:
Yes exclusively for business, we are repairing the complete room (drywall/windows/ac) just want to find out how much can be deducted as this will be a large bill. Would that be considered improvement instead of repair?
Repairs restore the property to as-is or as-was condition. Improvements add value to the property, extend its useful life, or adapt it to a new purpose. This is an improvement.
The default is to depreciate the improvements over 39 years (for business property).
There are two safe harbors that might allow you to take the cost as an expense rather than an improvement. I don't know enough about these two options to tell you if you qualify, you may want professional advice.
One of the safe harbors is that any item of tangible personal property costing less than $2500 and on a separate invoice can be expensed. I usually see this applied to equipment (computers, other medical equipment) that would normally be depreciated over 5 or 7 years. I don't think it applies to real property, only tangible property. But if part of the renovation includes such items, you may be able to expense them.
The other safe harbor is that you can expense improvements to business property if:
a. the adjusted cost basis of the property is less than $1 million, and
b. the cost of the improvements is 2% or less than the business annual gross income, and
c. the business gross annual income is less than $10 million.
https://www.nolo.com/legal-encyclopedia/small-taxpayer-safe-harbor-for-repairs-improvements.html
You may want to seek a professional opinion as to your exact situation.
