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I rewired and re-plumbed my rental (while it was rented). Since I must depreciate "upgraded wiring and plumbing" - do I just add up all those receipts?

ALL metal water pipes were replaced with PEX. ALL wiring was replaced. Receipts total $1134.
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1 Best answer

Accepted Solutions
Coleen3
Intuit Alumni

I rewired and re-plumbed my rental (while it was rented). Since I must depreciate "upgraded wiring and plumbing" - do I just add up all those receipts?

If it is a repair, that is you fixed something, you can expense it. If it is an improvement, you may still be able to expense it under the De Minimis Safe Harbor Election.

The De Minimis Safe Harbor Election 

This election for items $2,500 or less is called the De Minimis Safe Harbor Election. This election is an option you can take each year that lets you write off items $2,500 or less as expenses instead of assets. Expenses typically reduce your income by a larger amount than depreciating an asset over multiple years does. This means you could get a bigger refund.

If you decide to take this option, a form called De Minimis Safe Harbor Election will show up in your tax return. This election will apply to all your businesses, rental properties or farms.

Here are the rules you need to meet to take this 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.

The IRS indicates what constitutes a real property capital improvement as follows:

  • Fixing a defect or design flaw
  • Creating an addition, physical enlargement or expansion
  • Creating an increase in capacity, productivity or efficiency
  • Rebuilding property after the end of its economic useful life
  • Replacing a major component or structural part of the property
  • Adapting property to a new or different use

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3 Replies
Coleen3
Intuit Alumni

I rewired and re-plumbed my rental (while it was rented). Since I must depreciate "upgraded wiring and plumbing" - do I just add up all those receipts?

If it is a repair, that is you fixed something, you can expense it. If it is an improvement, you may still be able to expense it under the De Minimis Safe Harbor Election.

The De Minimis Safe Harbor Election 

This election for items $2,500 or less is called the De Minimis Safe Harbor Election. This election is an option you can take each year that lets you write off items $2,500 or less as expenses instead of assets. Expenses typically reduce your income by a larger amount than depreciating an asset over multiple years does. This means you could get a bigger refund.

If you decide to take this option, a form called De Minimis Safe Harbor Election will show up in your tax return. This election will apply to all your businesses, rental properties or farms.

Here are the rules you need to meet to take this 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.

The IRS indicates what constitutes a real property capital improvement as follows:

  • Fixing a defect or design flaw
  • Creating an addition, physical enlargement or expansion
  • Creating an increase in capacity, productivity or efficiency
  • Rebuilding property after the end of its economic useful life
  • Replacing a major component or structural part of the property
  • Adapting property to a new or different use

I rewired and re-plumbed my rental (while it was rented). Since I must depreciate "upgraded wiring and plumbing" - do I just add up all those receipts?

Thanks! Just what I needed to know!
Coleen3
Intuit Alumni

I rewired and re-plumbed my rental (while it was rented). Since I must depreciate "upgraded wiring and plumbing" - do I just add up all those receipts?

You're welcome.
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