Improvements are usually depreciated over 27.5 years and added to cost basis. If any of my improvements are added as de minimus safe harbor/ safe harbor for small business deductions, do I get to add these expenses to my cost basis as well?
For eg: My current cost basis for rental property is say 500,000. Let us assume, I have 2,000$ expense for replacing my water heater. If I depreciate it, my new cost basis for my rental property would be 502,000.
If I deduct this expense fully under safe harbour, does my cost basis stay at 500,000 or does it still increase to 502,000?
