I live in a rental property (Multi Family) I own. I had to replace the boiler. The cost of the boiler was $3,500 and the labor was $3,000, a total cost of $6,500. I can only deduct 50% of the cost because I live on the property. Can the cost of $3250 be deducted as an expense or as a capitalization?
In general, a boiler is considered an essential part of the building and as such is capitalized as an Improvement. There is no option to expense this type of asset, although you may be able to take Special Depreciation. The portion allocated to your personal residence would be an increase to your basis.
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