Investors & landlords

Yes, it can be confusing. And you are correct that it is a capital improvement to the property which would require the selection of Rental Real Estate Property.

There is one other option you can consider for this project which is the Safe Harbor for Small Taxpayers.

• What can I depreciate or expense with the business safe harbor method?

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

 If you find you do qualify for this option and you want to take the full expense in one year for the insulation project , use the steps below to enter it in your return. 

1. When you come to the screen, Did you buy any items that each cost $2,500 or less in 2024? mark the No button and click Continue.
2. If you mark that some cost above $2,500, you will be asked Did you make improvements to rental in 2024?
3. If you say Yes, you will be taken through the screens for the Improvements election.
4. If you say No, you will see the screen Do you have any items that aren't covered by your elections?  Proceed through the screens to enter these assets.
5. On the Rental Summary screen go to the Expenses section and click on the Start/Update box.
6. Continue to the Any Other Expenses? screen and enter the description and amount paid for the assets. Click Continue when finished.