Depreciating Kitchen Items In a Rental

[GGBJr]

Our daughter has renovated part of an apartment that she uses as a rental.  I believe that kitchen items, like stoves, refrigerators, dish washers, etc. are not capitalized and depreciated over 27.5 years, because their useful lives are much shorter.  Is there an exact number of years (5, I have read somewhere) which the IRS accepts?

[Bsch4477]

On average, kitchen appliances such as refrigerators, stoves, and dishwashers have a depreciation life of 10 to 15 years. 

[tagteam · Accepted solution]

See https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations#Ad...

She may be able to make an election using the de minimis safe harbor for items costing $2,500 or less which would allow her to immediately deduct the cost of one or more of those assets.

[GGBJr]

As I read the de minimus instructions, my daughter would not have to capitalize the purchases, but could expense them.  If she has an AFS (applicable financial statement), she could expense up to $5,000 per item.  But, what is an AFS?  Is this an invoice?  Would it have to be submitted with her tax return?  How does one do this if e-filing the return?

Also, does she have to prove to the IRS in some way that she qualifies for a de minimus status?

Thanks so much for your response to such a complicated subject!

[tagteam]

Basically, that would be audited financials (not applicable here).

[tagteam · Accepted solution]

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[tagteam]

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@GGBJr wrote:

.....does she have to prove to the IRS in some way that she qualifies for a de minimus status?

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No. Use the $2,500 figure and the program will generate the election form.

[GGBJr]

I read online that a de minimus-related return would have to be filed in paper with an attached form that it spelled out.  I don't know how old this statement is.  Are you saying that TT takes care of this automatically, thereby permitting an e-filing?  How do I tell TT that she is making a de minimus filing?

[GGBJr]

I found this form in TT (Premier version):

Tax Year:

2023

Safe Harbor Election for Small Taxpayers

The taxpayer elects to make the safe harbor for small taxpayers election under the Regulation 1.263 (a) -3(h)

How does the -3(h) vary from the -1(f)?

I filled out the form and ran a Review with no comments.  Does this imply that the return can be e-filed, and satisfy the Section 1.263(a) -1(f)  requirement?

[tagteam · Accepted solution]

One is the de minimis safe harbor for small taxpayers and the other is the de minimis safe harbor election; you want the latter.

The election form is 1.263(a)-1(f)(1)(ii)

[tagteam]

Also, you should be able to e-file without issue.

[GGBJr]

Found it!  It is shown in Forms, starting with "Reg.", etc., and not Safe Harbor.

Do I need to itemize the items that are being expensed in the return?  Or,  just sum them under  "other expenses"  (line 19) in Schedule E (this is a rental property)?

Appreciate all the help, for sure!  Thank you.