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gshort53
New Member

Does installation of a generator count as deduction

 
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3 Replies
DMarkM1
Expert Alumni

Does installation of a generator count as deduction

It depends.  If the home is your personal residence then no, there is no deduction for a generator installation.  Keep the information with your home purchase records as the cost could be added to your basis as an improvement when the home is sold.  

 

However, if the home is a rental property, a whole home generator install would be considered an improvement and depending on the cost may be deducted in the first year under a safe harbor election.  In the "Rental, royalty..." topic enter the cost as an asset and you will be asked about the safe harbor limits.   Here is an IRS link with more information on tangible property safe harbor deductions. 

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Does installation of a generator count as deduction

How about if you're taking a home office deduction? Then does this play into things?

MonikaK1
Expert Alumni

Does installation of a generator count as deduction

It depends. If you are calculating your home office deduction using a percentage of the square feet and taking depreciation on part of the home, then a capital improvement that pertains to the entire home such as a generator could be added as a separate asset and depreciated as well.

 

Whether you deduct the cost of an expenditure for the current year or recover it through depreciation over several years depends on whether it was for a minor repair or replacement or resulted in a capital improvement to your home. 

 

Capital Improvements extend the life of your asset and are not an ongoing repair expense. This would include the improvements to the part of the home not related directly to the home office.  In other words, any capital improvements to the entire home are eligible to be use as part of the cost of your home.  For any year after the year your business began, you would add an asset called improvements.  The home office use percentage will be applied to this new asset.  

 

For example, if you repair some minor damage to the floor, that could be seen as a current year expense. If, however, you replaced the flooring throughout the home, the new flooring would be listed as a new asset subject to depreciation.

 

The difference between repairs and capital improvements is also discussed in this TurboTax tips article.

 

@user17754131067 

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