replacing broken appliance at rental - expense or asset?

Forum|Forum|3 years ago
February 26, 2023
2 replies
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Would replacing a broken washing machine w/ a new one be considered an expense or asset?

Best answer by Anonymous_

@hayshal wrote:

Would replacing a broken washing machine w/ a new one be considered an expense or asset?

You can expense the washing machine using the de minimis safe harbor election provided the cost was $2,500 or less.

See https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations#Ademinimis

Anonymous_Answer

Employee

@hayshal wrote:

Would replacing a broken washing machine w/ a new one be considered an expense or asset?

You can expense the washing machine using the de minimis safe harbor election provided the cost was $2,500 or less.

See https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations#Ademinimis

Carl11_2

Employee

Typically, an appliance is considered to be an asset if used in/for the production of income. Being in a rental, it's used for the production of income. So it would be treated as an asset, classified as an appliance and depreciated over 5 years.

However, a washer does meet the criteria for the safe harbor de-minimus election if it's cost is less than $2,500. Personally, I don't know anyone who would spend more than $2,500 for a washing machine in a rental property. So under safe harbor you can just expense the item and enter it's cost in the rental expenses section as a miscellaneous expense. That way, you're done with it and don't have to deal with it again on your taxes if/when it breaks in the future, or if you sell the property.

hayshalAuthor

Thanks @Anonymous_ @Carl11_2 . Question though, how do I go about selecting to use de minimis safe harbor election if my total repairs cost is already > $2500? Usually when I have repairs < $2500 TT will prompt a question of if you want to use safe harbor or not.

Carl11_2

Employee

my total repairs cost is already > $2500?

I'm a bit bewildered at that. How on earth can a washing machine for a rental property be anywhere close to exceeding $2500? Even if you pay someone to install it and haul off the old one, there's no way I can see the cost exceeding $2500.

Overall, with your reference to "repairs", it sounds to me like the new washer was just one part of your costs here. Can you give details please, on just what it was that cost that much? I just find it incomprehensible that any landlord would pay $2,500 or more for a washing machine.

Did you have the old washer fly apart and cause other damage maybe? I ask, because years ago we purchased a new SamSung washer for the house. One of those "computer controlled" ones. Well, the computer screwed up apparently, because in the spin cycle the RPMs got so high that the machine literally flew apart causing thousands of dollars of damage to the laundry room. That's not an exaggeration either. Filed a legal claim with the manufacturer and in the end, they paid for all of my repairs, plus paid for a new washer of my choice (definitely not a Samsung) as well as all my legal fees.

So what's your situation here? If similar to mine, you would have repair expenses for any damages you fixed, and the cost of the washer would stand on it's own.