How to Classify A/C Purchased via Loan in Finances for Taxes

[mtrickey]

We got a loan to pay for a new air conditioner for a rental property. Do we list the full price of the air conditioner on our taxes the year it was purchased or do we count the monthly payments as expenses for that property each month? If we list the full price on the year it was purchased then how do we classify the monthly payments on our finances for taxes?

[Mike9241]

if under $2,500 you can expense the entire cost if you make the de minimus safe harbor election.  the election must be included in your returns. to find it type elections in the search box. you don't capitalize it in this case.. 

the rules for the election

You don't have an applicable financial statement (most people don't).
You have a consistent process for how you record expenses and assets.
You record these items as expenses on your books/records.
The cost of each item as shown on your receipt is $2,500 or less

if it cost more you capitalize the full cost and depreciate. don't know your situation as to profit or loss on the property so the depecition method to use is unknown. 

only the interest portion of the loan would be deductible based on the amount included in the payments you made for the year.  

[Carl]

You claim the full price in the tax year it was placed in service in the rental. Doesn't matter if you expense it (if it qualifies) or depreciate it. If the entire proceeds of the loan were used for the new A/C then the interest you pay on the loan is also deductible on SCH E.