You would enter all your income and expenses in the rental section. Any small repairs can be currently deducted as an expense.
Improvements are generally added to the basis of the home and depreciated. However, you can also deduct as an expense if you qualify.
Improvements Election
This election is an option you can take each year that
lets you write off some building improvements as
expenses instead of assets.
Here are the rules you need to meet to
take this election:
- 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
This
election for building improvements is called the Safe Harbor Election for Small Taxpayers. If you decide to take
this option, a form called Safe Harbor
Election for Small Taxpayers will show up in your tax return. This
election will apply to all your businesses, rental properties or farms.
To
make either of the elections please follow these steps:
Part 1. Make the election
- Click on Federal
Taxes > Wages &
Income [In
TT Home & Biz: Business > Continue > I'll choose
what to work on]
- In the Rental
Properties and Royalties section, click the Start/Update button.
- If you have already
started adding information about your business, you will be asked if you
want to review your rental and royalty information. Click the Yes box.
- When you come to the Rental and
Royalty Summary screen.
Click on the Edit box next to the property.
- If you haven't already
started adding information about the property, continue through the
screens to enter the needed information.
- You will now be on the Review
Your [property name] Rental Summary screen.
- In the Assets/Depreciation section, click on
the Start/Update box.
- When you come to the
screen, Did you buy any items that each cost $2,500 or less in
2015? mark
the Yes button and click Continue.
- On the screen Let's
see if you qualify to deduct these items as expenses, mark both of the Yes buttons and click Continue.
- On the Now,
let's review each item you bought screen, mark whether all your new assets cost
$2500 or less.
- If you mark that every item cost $2,500 or less, you
will be brought to the Rental Summary screen. You have
elected the De Minimis Safe Harbor provision. Proceed with Step 2,
below.
- If you mark that some
cost above $2,500, you will be asked Did you
make improvements to rental in 2018?
