Enter the asset in the Federal section. Consider whether it should be a 179 deduction or use the de minimis safe harbor election, or whether the item is just a consumable and can be listed as an expense.
To qualify for a Section 179 deduction, the asset must be:
- Tangible (you're able to touch it, which excludes intangible assets like patents or copyrights)
- Purchased (not leased) for business use
- Used more than 50% in your business
- Placed in service (purchased, acquired, or converted to business use) during the current tax year
- Acquired from a nonrelated party
The Section 179 deduction can't be claimed for business assets that were acquired in a tax-free exchange or from a person or entity with whom you share a close relationship as specified by the IRS.
See this help article for more information.
The IRS does also allow the expensing of certain items up to $2,500 without having to depreciate them. TurboTax asks questions in the rental interview to help you identify which items to treat as assets subject to depreciation versus current-year expenses.
Expenses are used to deduct the entire cost of services, utilities, fees, and consumable items (like cleaning supplies, light bulbs, smoke alarms, and batteries).
See this TurboTax help article and this one for more information.
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/deduct 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.
- Rental Property select Edit > Other expenses > Other Miscellaneous Expenses
- Enter Description (Safe Harbor ...) and amount (not entered as assets under this election)
Note: If you take the De Minimis Safe Harbor election, under the $2,500 threshold, you are not required to used section 179. You can list these expenses under Miscellaneous. If the amount was over 2,500, then you would enter these as assets and then would be able to choose the 179 option.
@CaliCollie
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
