Can I expense rental condo special assessment?

[alalee]

I own a condo that I rent. I paid $4500 for a special assessment to improve the drainage properties of the crawl spaces. The board determined the work done was a capital improvement with a 30 year life. Can I expense this rather than depreciate? If I depreciate, what method should I use?  Any new laws that allow for quick depreciation?  This is the only property I own.  Thought I saw something that allowed me to expense this if the amount was less than 6% of the value of the property.

[DJS]

Condominiums and Cooperatives. ... If you rent your condominium to others, you can deduct depreciation, repairs, upkeep, dues, interest and taxes, and assessments for the care of the common parts of the structure. You cannot deduct special assessments you pay to a condominium management corporation for improvements.

There is something called "bonus depreciation" but you're asset does not qualify. See the following - https://www.irs.gov/businesses/cost-segregation-audit-techniques-guide-chapter-6-8-bonus-depreciatio...

You may additionally have heard of something like this:

1. The de minimis rule: The de minimis rule allows you to expense any item that may be potentially capitalized so long as said expense (or the sum of related expenses) does not significantly distort your bottom line.  In other words, these expenses do not make up a large percentage of your total expenses, subsequently providing you with extraordinary low income.  A good rule of thumb is they should be less than 0.1% of your gross receipts for the year, and/or 2% of your total depreciation and amortization expense for the year.
2. The economic useful life: If the items purchased are used for one year and have no value after 12 months then they may be expensed. The only consideration here is timing; buying in December and consuming in January is frowned upon by IRS.  But, if those expenses do not distort your bottom line, you could argue for the deduction.

Safe Harbor for Businesses without Applicable Financial Statements

Under the new safe harbor rule, your capitalization policy may allow the following acquisitions to be expensed:

  assets that cost less than $500 and/or

  assets that have a useful life of less than 12 months.

The policy does not have to be a written one for this safe harbor, although it’s advisable to have it in writing.

Safe Harbor for Businesses with Applicable Financial Statements

Under the new safe harbor rule, your capitalization policy may allow the following acquisitions to be expensed:

   assets that cost less than $5,000 and/or

   assets that have a useful life of less than 12 months.

This policy must be written and must be applied to all asset acquisitions that meet the policy’s requirements.