I am thinking about pulling the appliances out and doing the De Minimus Safe Harbor election to deduct as an expense.
What do you mean "pulling the appliances out"? If those appliances are what came with the property when your originally purchased it, those appliances are already included in the cost basis of the property as a total and are being depreciated as "a part of" the structure depreciation over 27.5 years. YOu can't "pull them out" and then deduct them.
Safe harbor is for "new" purchases. For example, if you remove the old appliances and then go out and purchase new appliances, you have two choices with the new appliances.
1) Take the safe harbor and deduct the cost of the new appliance in the tax year purchased/placed in service, as an expense.
2) Treat the new appliance as an asset which is classified an an appliance and depreciated over 5 years. This option is available only in the tax year the asset/appliance is purchased/placed in service.
Is that all that I can claim under this election when thinking about a remodel?
Simply put, most likely, yes. Personally, (and this is just me) I'm not dealing with the PITA of separating things out on a remodel for safe harbor just to reduce my depreciation by a mere few bucks a year.
It was extensive in all three...bathroom & kitchen remodels in all three, painted all rooms, added a closet in two units.
I'd just total the cost of everything and if it was all placed in service on the same date, enter it as a single asset, classify it a residental rental real estate and depreciate over 27.5 years.
Also, I replaced HVAC in one. Would it be advantageous to pull that out and put on asset report separate, ie is there a special depreciation I could take for that?
You can if you want. But I wouldn't bother. Generally, I've never seen an HVAC system that was under $2,500. So that has to be capitalized/depreciated anyway. You can do it separately over 5 years if you want. But if it was a part of the remodel I wouldn't bother. Just include it in the grand total that gets depreciated over 27.5 years and be done with it.
Second, when I do claim the improvements on the asset report, would you claim the entire remodel on all 3 as a total or would you list them out for each unit? Does it matter? I am thinking of doing the latter.
That depends on how you've set things up in TurboTax. If you're reporting the rentals as 7 physically separate structures, then all costs directly associated with a specific unit get reported on SCH E for that specific unit. Even then, there are some things that would need to be split between the units. For example, say you have a structure that has 4 units in it and you're reporting each unit as a separate property. If you put a new roof on the structure you'd have to split that property improvement across all four units. Not all that difficult really.
Whereas if you elected to treat that 4-unit structure as a combined single unit by setting it up in TTX as a "multi-family structure", then there's nothing to split up and divide between those units.
Personally, I think it better to treat each unit in a multi-unit structure as it's own physically separate unit. Makes things easier and simpler under certain scenarios. For example, if things get bad and you have to move into one of the units as your primary residence, conversion from rental property to personal use is a breeze. Whereas if you're reporting income from the 4 units as a "multi-family" structure, converting 1 of the 4 units to personal use is a nightmare on the tax front.
Always look ahead at worst case possibilities and keep all your options open and as easy as you possibly and feasibly can. You've heard the saying, "Hope for the best, plan for the worst." I've altered it a bit for my needs.
Hope for the best, ***PREPARE*** for the worst.
Planning and preparing are not the same.
