No, payments are not allowed to be used. Instead you can enter and asset for depreciation as a capital improvement. There is one other option by selecting the safe harbor election explained below.
All interest portions of your payments can be deducted as 'other interest' (not mortgage).
You can choose the DeMinimis Safe Harbor (DMSH) election to take the expense in full.
The shower would be considered as a capital improvement to the property and would fall into the Safe harbor Election for Small Taxpayers. These are two different safe harbor methods.
- 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
Either or both safe harbor elections would be entered in the rental activity using Miscellaneous or Other expenses if you choose this method.
- Enter your description and amount
Keep close track of these expenses because they will be used to reduce cost basis at the time of a future sale, thereby increasing gain at that time.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
