2023 Bonus Depreciation

Forum|Forum|2 years ago
January 29, 2024
1 reply
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I have a rental and due to Hurricane damage I replaced gutters . My expense is $2796 and wondering if I can take the 2023 Bonus Depreciation of 80% and 20% in the next year . If so on the Asset Entry Worksheet Where do I go Sec179 ? 80% Unsure how the asset work sheet will populate ie: depreciation type , asset class, depreciation method etc..Or not bother and take 179 deduction for the year .

Any help would be most helpful, Thank you

Best answer by DianeW777

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.

DianeW777Answer

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

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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mjpb52Author

Thank you for the help, tried to get back to you sooner but the system seems slow and ponderous. When you normally sign in TurboTax the Forum seems non existent. I have had to do search and finally managed to find a link that has taken me to this missive.