How can I deduct the full cost of my new Fence?

[DA248]

I own a triplex rental apartment building and I installed a brand new vinyl fence that cost $9,800 in 2022.

Unfortunately, I cannot use the Safe harbor Election for Small Taxpayers for this improvement  because I do not meet the 2% of the unadjusted basis requirement.  The original cost of my building was $280,000 x 2% = $5,600 

I would like to know if there is a way that I can deduct/expense the full cost of my new fence?

Thank you in advance,

David

[Bsch4477]

You would add the expense to your cost basis as a capital improvement. 

[DA248]

Thank you for your response.  How would I add the expense to my cost basis as a capital improvement in TurboTax? 

[Bsch4477]

The cost of an improvement is divided up over the number of years you expect the asset to remain useful. You can deduct that percentage of the overall cost each year.

[DA248]

Thank you for you quick reply.  Are you familiar with using the 100% bonus depreciation rule?  I read that the bonus depreciation allows an investor to deduct the full cost of capital improvements in the same year the expense is incurred. It's my understanding that this rule expires at the end of 2022 and the bonus is scheduled to be phased out by the end of the 2026 tax year. Do you know how I can take advantage of using the 100% bonus depreciation rule. And if so, how do I apply this rule in TurboTax?

[Bsch4477]

That’s explained here. 

https://turbotax.intuit.com/tax-tips/small-business-taxes/what-is-the-irs-form-4562/amp/L6gi8XwN6

[DA248]

Thank you for the info. What I understood is that filing form 4562 is to claim a depreciation deduction which helps you track your prior deductions. The new rule however allows for 100% bonus "expensing" of assets that are new or used. I would like to use the bonus depreciation rule to expense my new fence this year. Do you have information on how I can do this through TurboTax?

[ThomasM125]

You need to enter the fence as an asset under the category of a land improvement and you will see an option in TurboTax to take the special depreciation allowance on it: