Combining safe harbor deductions with improvements in a DIY renovation

[abrdfd]

I have a single rental unit in my owner-occupied building, and last year when the space went vacant I undertook several repairs of walls, floor refinishing, painting etc and also renovated the bathroom - mostly myself but with a $4500 plumbing bill as well.  I am really struggling to get through the safe harbor rules.  2% of the unadjusted basis of my building is $5500.  I understand that because all the work was done in the timeframe of a renovation that the entirety of the work could be bundled under depreciating assets, but I could really use some relief as the work totaled $15000 and I am very small-time.  Is there any reason I can't expense via safe harbor several of the DIY receipts or even the floors ($2400) and then bundle the remaining costs under assets?  Or can I carefully extract all receipts related to the wall/floor/etc repairs to maintenance and put the bathroom renovation receipts in the asset category with the plumbing bill?  For context I am not a real-estate professional and have an unrelated job.

[JulieS]

Yes, you probably can expense at least some of your costs as routine maintenance. 

To be considered routine maintenance your expenses need to meet these criteria:

• It is paid for recurring activities performed on tangible property.
• It arises from the use of the property in your trade or business.
• It keeps your property in an ordinary, efficient operating condition.
• You reasonably expect, at the time the property is placed in service, to perform this activity more than once during the 10-year period after you place the building in service; or more than once during the class life of the particular type of property. 

For instance, refinishing a hardwood floor, or replacing carpet would meet this standard because you can expect to do it again after a few years of rental use. 

You must capitalize the costs of making improvements if the improvements result in a betterment to the unit of property, restore the unit of property, or adapt the unit of property to a new or different use.

Some examples of improvements include rewiring or replumbing of a building, replacing an entire roof, and putting an addition on your building.

Click here to read the applicable section of Publication 535.