New fence replacement on rental property is deductible or depreciation

[Jane Dang]

Hi,

My rental property is a single-family home. I had to replace the fences after a strong storm last year, which costed $4200 in materials and labor. Is it possible for me to declare it as a repair and deduct the expense in the same year? It was not a newly constructed fence to increase the value of the property; rather, it was a replacement for an old, damaged fence due to nature disaster. If my logic is faulty and I have to perform deprecation, could you please advise me the number of years that a fence has to be depreciated?

Thanks,

Jane

[Michael Plaks]

Quote from @Jane Dang:

I appreciate all of your suggestions. Although many of you are CPAs or tax professionals, I find conflicting information. It appears that there is no obvious process for claiming this fence. If I see a CPA, I wonder if he will follow his own advice and how I will know if he is correct when other CPAs disagree. I feel as though I'm stuck.

@Henry Clark, The property is located in California and has a market value of $1.7M. Since it's easy and advantageous to write off in the same year, It is easy for me to be consistent in that manner, but I don't think we have that choice, we have to follow what IRS allowing.

@Sean Graham, I looked up section 179 but it seems fence is not in the list of qualified items.

Correct on it being confusing. There're different interpretations of "tangible property regulations" which is the law that controls repairs vs. capital improvements determination. You can glimpse how confusing it is for yourself. This is the IRS "intro":
https://www.irs.gov/businesses/small-businesses-self-employe...
and this is their 256-page guide to train their auditors:
https://www.irs.gov/pub/irs-pdf/p5712.pdf

So yes, you will come across different opinions from different tax professionals. This happens in many areas of the tax law. 

The suggestion to "expense everything below $20,000" flies in the face of the regulations. You have a de minimis exception which is set at $2,500, and it can be doubled to $5,000 if you follow certain strict and tedious accounting practices known as AFS. But not $20,000.

You are also correct that Section 179 does not apply to fences.