If my rental property manager deducts the cost of new flooring from his disbursement to me, do I have to expense it, list it as a new asset, or an improvement?

[fernanda2008]

I purchased the flooring materials myself online, and the property manager hired and paid an installer, and deducted the cost from the rental income, before disbursing to  me.  How should I handle this on my return?

[DS30 · Accepted solution]

You will want to list the full amount of the cost as a capital improvement. However, if the full cost was less than $2,500, you can make the safe harbor election and expense the entire amount in the current year.

If the 1099-MISC from the management company already includes the installation expenses (so you have a net amount), then you would just need to expense (under repairs and maintenance) the cost of the flooring itself.

Otherwise, if the 1099-MISC from the management company shows the full amount of the rent or you do not get a 1099-MISC from the management company, then just report the full amount of the rent and include the amount deducted for the installer (plus the flooring material costs) as either a repair cost (if electing the safe harbor election) or as a capital improvement (and list under the asset section).

Please see the information below about the safe harbor election.

https://ttlc.intuit.com/replies/5361755