Replaced old light fixtures in my rental with new light fixtures. Is this a repair or improvement?

Forum|Forum|3 years ago
February 2, 2023
2 replies
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Replaced old light fixtures in my rental with new LED light fixtures. Is this a repair or improvement?

The old fixtures were very old and would get very hot, so decided to replace as I felt it was a hazard. Purchased $800 worth of new light fixtures to replace the old ones.

Vanessa A

Replacing light fixtures would be repairs and maintenance.

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Carl11_2

Employee

$800 depreciated over 27.5 years comes out to less than $30 a year. It's going to have ZERO impact on your tax liability. Light fixtures get replaced/updated all the time. It's a maintenance/repair expense. Besides, I've seen situations where sellers will remove the $800 fixture and replace it with a $40 fixture before putting the property on the market for sale. Yes, I realize your total costs for all fixtures was $800. Figuring an average of 6 fixtures (as opposed to just replacing bulbs) that's $133 each. Just expense it and be done with it.

Things might be different if you installed a $5000 crystal chandelier. But nobody in their right mind would do that in rental property. Even high end hotels use the cheap stuff in the hotel rooms. It may "look" extravagant, but chances are it's plastic or acrylic.

Opus 17

Employee

Per @Carl11_2 , you want your depreciation as small as possible. I think this could be considered an improvement, because it's attached to the home and has an expected life of more than 1 year. But it does fall under the $2500 safe harbor, so you can consider it an expense.

Rocko1234Author

Does this mean this costs can be entered in the "Repairs" section of expenses? Or must I enter through the "Asset/Depreciation" section?

Also, what if I decide not to enter the light fixtures at all? Am I required to do so?

Carl11_2

Employee

I would enter it in the expenses section as a maintenance expenses. It's not like you had all broken light fixtures that you had to replace. But understand that weather you enter it as a repair or maintenance expenses doesn't matter. It's deducted just the same.

Also, what if I decide not to enter the light fixtures at all? Am I required to do so?

Why would you not want to? If anything, the increased carry over loss will help offset the taxability of any gain when you sell the property later down the road.