Depreciation 179

[mgc6288]

I purchased a new rental last April and over the summer I replaced a few appliances, one for $720 and another for $690.  

I have rental losses in total of $24,600 but I also have a S Corp in which my Schedule E is still a net positive.

Normally I'd just 179 the appliances and move on as depreciating out over five years for $200/yr just doesn't seem worth it. 

If I do 179 in this instance then the excess of $25k in losses will simply carry over until next year.  Is this a big deal to the IRS (like extra scrutiny) or should I just do the straight line to keep under the $25k max loss amount?

[PatriciaV · Accepted solution]

If the appliances were placed in service before 12/31/2023, you may consider taking the De Minimis Safe Harbor Election to expense them fully rather than adding them as rental assets. Generally, for assets costing less than $2,500 each, the Safe Harbor Election is a better choice.

As long as you are renting the property at Fair Market rent for your area, with an intent to make a profit, a loss in the first year shouldn't raise any flags.

[mgc6288]

I like your De Minimis idea and I figured it out, thank you!