In 2020 took both an expense and depreciation for a rental's waterheater.
That's double-dipping and a definite no-no. You either expense it *or* depreciate it. You can't do both. Since you expensed it on your 2020 tax return, you need to delete the asset entirely on your 2021 return.
Next, check your 2020 tax return. If you were allowed any depreciation on the asset in any way, shape, form or fashion (27.5 year, SEC179 or SDA), you need to amend and recapture that depreciation (I seriously doubt it will make any difference on your tax liability for 2020 though) and remove the water heater entirely from the assets/depreciation section.
Take note that a water heater is in that "grey area" too. While others may (and most certainly can) disagree with me, I view it like this:
The water heater becomes "a physical part of" the plumbing when installed, which is already "a physical part of" the structure. Therefore it gets classified as residential rental real estate and depreciated over 27.5 years. With that classification it's flat out not eligible for SEC179 or the Special Depreciation Allowance (SDA).
Now in my area the cost of a new water heater including installation is between $800-$900 and depreciating that over 27.5 years, you're only talking $30-35 a year. Doesn't change your tax liability by a single penny. So I'd just expense it in the year of purchase/installation under Safe Harbor di-minimis and be done with it. (Sounds to me like that's what you did, too)
