Expense (electing de minimis) or depreciate rental renovation costs?

Forum|Forum|1 year ago
June 9, 2024
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I have read a number of posts here and articles online but am still unclear on what is acceptable.

I did some renovations to the kitchen and bathrooms for a rental property. It involved a lot of expenses costing less than $2,500 per receipt for things like light fixtures, tiles, faucets, mirrors, shower doors, toilets, etc. The big ticket items costing more than $2,500 were for labor, cabinets and countertops. A lot of the information I've seen online indicate to expense tangible items like appliances, but I have not been able to find information about how to handle costs for other tangible items as mentioned that go into a renovation.

Can I expense all the items costing less than $2,500 per receipt (via electing de minimis?) or must they be depreciated as a total cost of the renovation?

Thank you very much to this community!

Not A Product Question

Best answer by M-MTax

You can use the safe harbor for amounts paid of $2500 or less.

M-MTaxAnswer

You can use the safe harbor for amounts paid of $2500 or less.

sunshine39Author

Thank you! Since we purchased almost all of the supplies for the renovations ourselves, there are many, many items with receipts under $2500. Is there a higher likelihood of triggering red flags/audit if we claim about 40 items using safe harbor? Even thought we have receipts for everything, we just want to avoid the hassle of dealing with the IRS. Thanks again!

affordable2020

It’s possible it could get pulled for a random review, but you’ve got the receipts to verify the purchases and that the work was indeed done at the rental house. The IRS is very unpredictable these days as you’ll see by reading some of these posts.