Like the original poster, I replaced my HVAC within my Residential Rental Property (though my replacement occurred in Tax Year 2024). After reviewing the information and advice in this thread, I followed TT prompts after adding a 'Improvements, furnishings, and other assets' entry. After confirming cost exceeded $2500 (the de minimus Safe Harbor upper limit), I confirmed the expense qualified as an improvement (pop-out window explicitly lists HVAC as an example under the 'Restoration' category). Following this path, I was able to qualify the full expense for deduction in the current Tax Year (instead of depreciation over 27.5 years) under the 'Safe Harbor Election for Small Taxpayers' after confirming:
- Your gross receipts, including all your other income, are $10,000,000 or less.
- The unadjusted basis (typically, the original cost) of your building was $1,000,000 or less.
- The cost of all repairs, maintenance and improvements is less than or equal to $10,000 or 2% of the unadjusted basis of your building, whichever is lower.
In my case, I fulfilled all 3 conditions and simply added the expense under the 'Miscellaneous' category.
