Can I claim 172 deduction on rental property improvement?

Since the property is nonresidential, you may be able to take 179 deduction for the roof  if the improvement falls under the category Qualified section 179 real property.  The exterior wall does not come under this category.  However, if the repairs to the exterior wall are less than $2,500 you could choose to expense them using the de minimis election.  [Steps listed later.]

According to IRS Pub. 946 - How To Depreciate Property [p, 16]

Qualified section 179 real property. You can elect to treat certain qualified real property you placed in service during the tax year as section 179 property. If this election is made, the term “section 179 property” will include any qualified real property that is:

• Qualified improvement property as described in section 168(e)(6) of the Internal Revenue Code, and

• Any of the following improvements to nonresidential real property placed in service after the date the nonresidential real property was first placed in service. 1. Roofs. 2. Heating, ventilation, and air-conditioning property. 3. Fire protection and alarm systems. 4. Security systems. 

Qualified improvement property. Generally, this is any improvement to an interior portion of a building that is nonresidential real property if the improvement is placed in service after the date the building was first placed in service. Also, qualified improvement property does not include the cost of any improvement attributable to the following: • The enlargement of the building, • Any elevator or escalator, or • The internal structural framework of the building.

De Minimis Election

This election for items $2,500 or less is called the De Minimis Safe Harbor Election. This election is an option you can take each year that lets you write off items $2,500 or less as expenses instead of assets. Expenses typically reduce your income by a larger amount than depreciating an asset over multiple years does. This means you could get a bigger refund.

If you decide to take this option, a form called De Minimis Safe Harbor Election will show up in your tax return. This election will apply to all your businesses, rental properties or farms.

Here are the rules you need to meet to take this election:

• You don't have an applicable financial statement (most people don't).
• You have a consistent process for how you record expenses and assets.
• You record these items as expenses on your books/records.
• The cost of each item as shown on your receipt is $2,500 or less.

Part 1.  Make the election

1. Click on Federal  > Wages & Income [In TT Self-Employed:  Business > Continue > I'll choose what to work on]
2. In the Rental Properties and Royalties section, click the Start/Revisit button.  
3. If you have already started adding information about your business, you will be asked if you want to review your rental and royalty information.  Click the Yes box. 
4. When you come to the Rental and Royalty Summary screen.  Click on the Edit box next to the property.   
5. If you haven't already started adding information about the property, continue through the screens to enter the needed information.
6. You will now be on the Review Your [property name] Rental Summary screen.  
7. In the Assets/Depreciation section, click on the Start/Update box.
8. If you’ve already entered some assets, you will see the screen, Do you want to go directly to your asset summary?  Mark the No box and click Continue.
9. When you come to the screen, Did you buy any items that each cost $2,500 or less in 2020? mark the Yes button and click Continue.
10. On the screen Let's see if you qualify to deduct these items as expenses, mark both of the Yes buttons and click Continue.  .
11. On the Now, let's review each item you bought screen, mark whether all your new assets cost $2500 or less.
12. If you mark that every item cost $2,500 or less, you will be brought to the Rental Summary screen.  You have elected the De Minimis Safe Harbor provision.  Proceed with Step 2, below.
13. If you mark that some cost above $2,500, you will be asked Did you make improvements to rental in 2020?
    • If you say Yes, you will be taken through the screens for the Improvements election. 
    • 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.  ,

Step 2.  Enter your election-related items as other expenses.

1. On the Rental Summary screen go to the Expenses section and click on the Start/Update box. Click I'll choose what I work on. 
2. Continue to the Any Other Expenses? screen and enter the description and amount paid for the assets. Click Continue when finished.