It depends. If your cost for the gutters is less than or equal to 2% of the unadjusted basis (before any depreciation used) of your building then you could choose to use the Safe Harbor election. This means you would not enter an asset, instead you would enter the cost under miscellaneous expenses on your rental section of the return.
Safe Harbor 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 this does not apply in your situation, it would be considered an improvement and depreciated over the life of the property, meaning 27.5 year recovery of cost starting in 2023. This does not qualify for Section 179 or Bonus depreciation.
For regular depreciation you would select Residential Rental Real Estate as the asset type if you do not qualify for the Safe Harbor election.
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