Is a $9,500 HVAC replacement in a rental considered a home improvement for the Safe Harbor Election for Small Taxpayers?

[manbeing]

The cost is over $2,500, so it is definitely not eligible for the De Minimis Safe Harbor Election. Since it is not over $10,000, I just wanted to know if it qualifies as a home improvement for the Safe Harbor Election for Small Taxpayers so that I don’t have to capitalize and depreciate it over the years.

[LeticiaF1 · Accepted solution]

As long as you meet the 3 qualifications listed, you can claim the Safe Harbor Election for small businesses. ‌Just be careful with the last requirement, which is that the total amount paid during the taxable year for repairs, maintenance, improvements, or similar activities performed on such building property doesn't exceed the lesser of two percent of the unadjusted basis of the eligible building property; or $10,000 (for questions about how to calculate the unadjusted basis.  

For more information refer to the following:

Publication 946

Tangible Property Regulations