rental property

[linjmur]

I have always used a CPA for my returns.  Now as I am entering in Turbotax I have found out about the elections to expense instead of capitalize expenses (safe harbor election for taxpayers, and the de minimus safe harbor election).  It doesn't look like my CPA has ever used these for me in the past.  Are they commonly used?  It's always better to expense rather than capitalize, right?  It seems odd that I don't see these in my past returns.

[HelenC12 · Accepted solution]

Yes, this is commonly used by business and rental owners. You may want to ask the CPA for his rational for depreciating versus expensing. 

Yes, expenses typically reduce your income by a larger amount than depreciating as an asset over a number of months or years. This means you could get a bigger refund.

However, it may be more advantageous to depreciate your assets to take advantage of the Qualified Business Income (QBI) deduction. 

With the QBI deduction, most self-employed taxpayers, rental owners and small business owners can exclude up to 20% of their qualified business income from federal income tax (but not self-employment tax) whether they itemize or not.

Click here to review the TurboTax What is the Qualified Business Income (QBI) deduction? FAQ.