bought new heat pump for rental property

[victoriamck]

I bought a new heat pump for a rental property in 2024.  Where do I deduct that?  There is an energy efficient rebate as well - where is that? 

[DianeW777]

The heat pump can be depreciated using 7 or 10 years or use the DeMinimis Safe Harbor (DMSH) method or the Safe harbor Election for Small Taxpayers. See the details below.

• What can I depreciate or expense with the business safe harbor method?
• How do I handle capital improvements and depreciation for my rental?

If the heat pump would be considered as a capital improvement to the property and would fall into the Safe harbor Election for Small Taxpayers. 

• Rules for this method for capital improvements:
  • Your gross receipts, including all your other income, are $10,000,000 or less.
  • Your eligible building has an unadjusted basis of $1,000,000 or less.
  • The cost of all repairs, maintenance and improvements is less than or equal to the smallest of these limits:
    • 2% of the unadjusted basis of your building or
    • $10,000

Either or both safe harbor elections would be entered in the rental activity using Miscellaneous expenses if you choose this method. Answer the question that applies to you.

• Enter your description and amount 

Keep close track of these expenses because they will be used to reduce cost basis at the time of a future sale, thereby increasing gain at that time.

[AmeliesUncle]

Heat pumps are generally depreciated the same length as the building.  In the case of a Residential Rental Property, that is usually 27.5 years.

There are no energy tax credits for a heat pump in a rental property (property that is not used for your personal use).