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dampsquid
Level 1

De minimis Safe Harbor & Improvement to rental

I did minor remodelling to a kitchen and bathroom. Total cost ~$1500.  I want to take the De minimis Safe Harbor Election election on this expense.

First, when entering the asset in TT there's not a good fit:

- Residential Rental Real Estate: only allows straight line depreciation over 27.5yrs

- Appliances, carpet, furniture: Allows the election, or apparently does but the 'asset' isn't one of these

- Land Improvements - clearly not his!

First question: where do I put this?

Next, if it's under 'appliances, carpet, furniture' eventually I get the 'how do you want to deduct this item?' question.  If I choose the second option, 'I'll deduct the full value of the item this year' my net income for the rental reduces by a small amount (few dollars) only.  If I choose 'I'll take the 100% special depreciation allowance' the income reduces by the full amount (like that one)... but TT says this option is available 'only if the original use of the property begins with you'.  What on earth does that mean?  Which can I choose here?

Thanks in advance.

3 Replies
taxes4sumting
Level 3

De minimis Safe Harbor & Improvement to rental

there are 2 safe harbor elections but you'll probably just want to write that stuff off immediately.....special depreciation allowance....because $1500 is not enough to be concerned about.
Carl
Level 15

De minimis Safe Harbor & Improvement to rental

I did minor remodelling to a kitchen and bathroom.

Doesn't matter how minor it is. If it "adds real value" to the property itself, and becomes "a material part of" the property, it's classified as Residential Rental Real Estate. period.

You'll enter your $1500 cost in the COST box, and ZERO in the "cost of land" box.

Residential rental real estate does not qualify for the SEC179 deduction. But with that low a cost you most certainly can take the Special Depreciation Allowance (SDA). That will allow you to depreciate up to the entire $1500 that first year all in one shot.

AmeliesUncle
Level 12

De minimis Safe Harbor & Improvement to rental


@dampsquid wrote:

I want to take the De minimis Safe Harbor Election election on this expense.

 


You start off in the "assets" and answer the questions about the De Minimis Election to make that election.

 

Then you enter the expenses OUTSIDE of the "asset" section.  That election is saying you are NOT treating it as an "asset".  Enter it as a Supply, or Repair, or "Other" expense.

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