Question

$2,500 de minimis per item

Forum|Forum|4 years ago
April 12, 2022
1 reply
0 views

Hi there

I have had renovations done on my rental, all of which can be considered renovation and therefore will be depreciated. On some of the larger invoices for this renovation there are individual line items that are less than $2,500. I would like to understand the ruling in this case. So let's say a single invoice for $9,000 has 3 line items: one for $5,000 and two for $2,000 each. Is it correct that I can expense the two line items costing $2,000 and depreciate the line item costing $5,000?

Many thanks

V

Vanessa A

It depends on the invoice. It would be the total expense if it was one project. If it was multiple projects unrelated, then yes as they would be separate things.

For example, if you had a bathroom remodeled and the invoice was split between fixtures, drywall, and labor, then you would NOT be able to deduct each item separately.

If you had a roof done and siding done on the same invoice, then yes, these would be two separate and unrelated items.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

S

sc101Author

Thank you Vanessa. The improvement is the renovation of an annex to the house, taking it from derelict to liveable/rentable. This one overall project involves the services of a roofer, a stonemason, an electrician, a plumber and more. So taking the example, let's say I've an invoice from the roofer with 3 line items of $5k/$2k/2K and an invoice from the electrician with the same split. Can i expense $4k from each artisan, or $2k from each artisan....or only $2k from one artisan since there is only one overall project (being the rendering rentable of a derelict annex)?

Thanks again

V

Vanessa A

Since this is one overall project, none of your expenses are going to qualify as an expense of less than $2,500. I did not quite understand the scope of your project. Separate renovations are different than an entire gutting and overhaul. You basically are creating an entirely new building with a new life. You would need to depreciate the new building with a new life, not expense it. This is one big asset, not separate ones.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"