Appliance expenses

[bmshah1]

My wife owns an out of state rental property that she bought in May 2022.  We needed a new washer/dryer and a refrigerator for the rental property. My father-in-law who lives in the same state as the rental property paid for all these 3 appliances. My father-in-law doesn't own the property. We bought the appliances and put them to use in 2022 after the property was rented on July 1st. Can we deduct the expense of the appliances on our taxes?

[DoninGA]

Those are Assets for the property that have to be depreciated.

[Carl]

Those are Assets for the property that have to be depreciated.

That's only one option. If the cost was less than $2,500 then you have the option to just expense them under the Safe Harbor di-Minimus rules. I myself would go that route so I don't have to deal with the headaches of depreciation recapture when I sell the property, or the remaining depreciation when the next tenant destroys those assets.

[Anonymous_]

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@Carl wrote:

If the cost was less than $2,500 then you have the option to just expense them under the Safe Harbor di-Minimus rules. I myself would go that route so I don't have to deal with the headaches of depreciation recapture.......

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I agree that would be the route to take but there would be "recapture" in the sense that the asset being expensed has a basis of zero ($0). If sold at a later date, any gain on the sale would have to be reported as ordinary income and taxed at ordinary income tax rates (and, unlike unrecaptured Section 1250 gain, there is no 25% cap).

[bmshah1]

If I expense these items do they each have to be <2,500 or the total has to be <2,500 for me to expense them out.

[Anonymous_]

It is $2,500 or less per invoice.

EDIT: See later posts (or per item as substantiated by the invoice).

[bmshah1]

My invoice is >2,500 for both washer/dryer being on the same invoice. I guess I would have to depreciate them :(

[Anonymous_]

For appliances, you can most likely get the vendor to separate them (i.e., put them on separate invoices).

EDIT: See later posts.

[Carl]

If the cost of those appliances is broken out separately on the purchase receipt and the cost of each individually is under $2,500, then you can expense them with no problem. If the vendor that sold you the appliances didn't break it down like that, it shouldn't be a problem to ask them to do that.

[binkyscave]

It's $2,500 per item plus any applicable fees.

[Anonymous_]

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@binkyscave wrote:

It's $2,500 per item plus any applicable fees.

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That is actually correct; $2,500 per invoice or per item as substantiated by the invoice.

Treas. Reg.  §1.263(a)-1(f)(i)(ii)