Yes, the action you describe is correct. You may have missed the guidance for you to enter the total expense under miscellaneous expenses in your rental activity. These questions were guiding you to decide if you want to deduct in full any asset purchased in 2025, if the cost was $2,500 or less.
See the details below for DeMinimis Safe Harbor option. This does not apply for assets purchased in an earlier year, and it does not apply to the rental house itself.
You should be using Schedule E and not Schedule F for a rental activity.
Safe Harbor Election for Small Taxpayers:
If you find you do qualify for this option and you want to take the full expense in one year use the steps below to enter it in your return.
- When you come to the screen, Did you buy any items that each cost $2,500 or less in 2025? mark the Yes button and click Continue.
- On the screen Let's see if you qualify to deduct these items as expenses, mark both of the Yes buttons and click Continue.
- On the Now, let's review each item you bought screen, mark whether all your new assets cost $2500 or less.
- If you mark that every item cost $2,500 or less, you will be brought to the following: You have elected the De Minimis Safe Harbor provision.
- If you mark that some cost above $2,500, (this is for capital improvements to a building only)
- If you say No, you will see the screen Do you have any items that aren't covered by your elections? Proceed through the screens to enter these assets.
- On the Here's the Info for this work screen go to the Expenses section and click on the Start/Update box.
- Continue to the Miscellaneous Expenses? screen and enter the description (Safe Harbor) and amount paid for the assets. Click Continue when finished.
- The asset will not be entered as above, it will be entered as a miscellaneous expense.
All assets are taxable items until they are disposed of by sale or junked. Keep a record of any and all assets for your rental.
@SStern
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