I had a new AC unit installed for my rental condo and am making monthly payments. Can I expense those payments on my schedule E?

No, payments are not allowed to be used. Instead you can enter and asset for depreciation as a capital improvement.  There is one other option by selecting the safe harbor election explained below.

 

All interest portions of your payments can be deducted as 'other interest'  (not mortgage).

 

You can choose the DeMinimis Safe Harbor (DMSH) election to take the expense in full.

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

The shower would be considered as a capital improvement to the property and would fall into the Safe harbor Election for Small Taxpayers.  These are two different safe harbor methods.

• 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 or Other expenses if you choose this method.

• 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.