Are we able to expense items under de minimis safe harbor that would otherwise be cap
Most Popular Reply
Michael PlaksPro Member
Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votesQuote from @Stan J.:
I renovated a unit and it looks like it doesn't make sense to depreciate the costs over 27.5 years since the amount is somewhat small. Am I able to immediately expense costs like new flooring, shower tiles/flooring that would otherwise be capitalized? Yes, I'm aware of the $2,500 non AFS limit and each invoice is under that. I'm not aware of a cap though if there is one.
Breakdown:
- 7 invoices total and they're all unique for each part of reno (separate invoice for flooring, shower tile, demo, etc).
- I'm using the total amount for each invoice and the highest one is $2,500. The rest are a couple hundred bucks per invoice or ~$1k (labor)
This is a tricky question subject to interpretation. The Regulations contain an "anti-abuse rule" which basically prohibits breaking into multiple invoices "a single unit of tangible property."
This opens a huge barrel of worms because the definition of unit of tangible property is extremely convoluted and therefore can have different interpretations depending on specifics of each case and on the CPA whom you ask.
It seems that you merely had different stages of the same renovation project. Chances are that it should be considered a single unit and capitalized. But this opinion is made on incomplete facts of your case.
There are two important alternatives to de minimis that you have not explored, or at least have not mentioned.
A. Does your flooring qualify as personal property eligible for 100% bonus depreciation (yes for carpet, no for glued-down tiles) [Not a reference to my colleague's last name ;)]
B. Does your work qualify as fully deductible repairs rather than capital improvements?
And yes, these questions also have different answers, depending on each case specifics and on each CPA's interpretation.
14 Replies
- Accountant · Long Island, NY · Member since 2021 · 184 posts · 148 votes7mo
Quote from @Stan J.:
I renovated a unit and it looks like it doesn't make sense to depreciate the costs over 27.5 years since the amount is somewhat small. Am I able to immediately expense costs like new flooring, shower tiles/flooring that would otherwise be capitalized? Yes, I'm aware of the $2,500 non AFS limit and each invoice is under that. I'm not aware of a cap though if there is one.
Breakdown:
- 7 invoices total and they're all unique for each part of reno (separate invoice for flooring, shower tile, demo, etc).
- I'm using the total amount for each invoice and the highest one is $2,500. The rest are a couple hundred bucks per invoice or ~$1k (labor)
I don't have the invoices to review, however if each invoice is for a SEPARATE job (and itemized/below $2500), then yes generally you can expense under the de minimus safe harbor. Make sure you have your CPA elect the DMSH.
You have to be careful of artificially splitting invoices to get below $2500 for each. For ex - same contractor, on the same day, for the same job, broken up into 4 different invoices.
- 7moStan J.Member since 2025 · 43 posts · 8 votesOP
Quote from @Christopher Tile:
Quote from @Stan J.:
I renovated a unit and it looks like it doesn't make sense to depreciate the costs over 27.5 years since the amount is somewhat small. Am I able to immediately expense costs like new flooring, shower tiles/flooring that would otherwise be capitalized? Yes, I'm aware of the $2,500 non AFS limit and each invoice is under that. I'm not aware of a cap though if there is one.
Breakdown:
- 7 invoices total and they're all unique for each part of reno (separate invoice for flooring, shower tile, demo, etc).
- I'm using the total amount for each invoice and the highest one is $2,500. The rest are a couple hundred bucks per invoice or ~$1k (labor)
I don't have the invoices to review, however if each invoice is for a SEPARATE job (and itemized/below $2500), then yes generally you can expense under the de minimus safe harbor. Make sure you have your CPA elect the DMSH.
You have to be careful of artificially splitting invoices to get below $2500 for each. For ex - same contractor, on the same day, for the same job, broken up into 4 different invoices.
I spent a good chunk of my day doing more research on this. We have the option of using the amount of each line item (if any), right? That's how my invoice is broken up, but I was originally using the sum of each. Are we able to expense labor with de minimis as well?
- Accountant · Long Island, NY · Member since 2021 · 184 posts · 148 votes7mo
Quote from @Stan J.:
Quote from @Christopher Tile:
Quote from @Stan J.:
I renovated a unit and it looks like it doesn't make sense to depreciate the costs over 27.5 years since the amount is somewhat small. Am I able to immediately expense costs like new flooring, shower tiles/flooring that would otherwise be capitalized? Yes, I'm aware of the $2,500 non AFS limit and each invoice is under that. I'm not aware of a cap though if there is one.
Breakdown:
- 7 invoices total and they're all unique for each part of reno (separate invoice for flooring, shower tile, demo, etc).
- I'm using the total amount for each invoice and the highest one is $2,500. The rest are a couple hundred bucks per invoice or ~$1k (labor)
I don't have the invoices to review, however if each invoice is for a SEPARATE job (and itemized/below $2500), then yes generally you can expense under the de minimus safe harbor. Make sure you have your CPA elect the DMSH.
You have to be careful of artificially splitting invoices to get below $2500 for each. For ex - same contractor, on the same day, for the same job, broken up into 4 different invoices.
I spent a good chunk of my day doing more research on this. We have the option of using the amount of each line item (if any), right? That's how my invoice is broken up, but I was originally using the sum of each. Are we able to expense labor with de minimis as well?
As @Michael Plaks and @Aaron Zimmerman alluded to, it depends and requires more information/advisory/consultation.
I'll give you a few examples as to how I think about it.
If one invoice was for LVP flooring - the flooring itself was $2k, and the labor to install was $1k. Since this all related to installing the LVP, I'd consider that one project and capitalize the entire "improvement" for $3k. LVP flooring is a bonus depreciable asset class so really, you'll be getting 100% bonus depreciation anyway if you just completed it.
However, let's say the invoice was the same but also included $1k of plumbing repairs as a separate line. Then you'd be able to expense (completely separate from the LVP flooring) that repair immediately as it is under the $2.5k safe harbor.
Lastly, if all of the above were on an invoice and it was not itemized, simply just had the total dollar amount and a description line stating all the items included in that total, there would be no way for any of us to prove/defend that one of the repairs/improvements were under $2.5k. Therefore in order to be conservative, we'd be forced to capitalize the entire amount unless you received an itemized invoice.
- 7moMichael PlaksPro MemberTax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
Quote from @Stan J.:
I renovated a unit and it looks like it doesn't make sense to depreciate the costs over 27.5 years since the amount is somewhat small. Am I able to immediately expense costs like new flooring, shower tiles/flooring that would otherwise be capitalized? Yes, I'm aware of the $2,500 non AFS limit and each invoice is under that. I'm not aware of a cap though if there is one.
Breakdown:
- 7 invoices total and they're all unique for each part of reno (separate invoice for flooring, shower tile, demo, etc).
- I'm using the total amount for each invoice and the highest one is $2,500. The rest are a couple hundred bucks per invoice or ~$1k (labor)
This is a tricky question subject to interpretation. The Regulations contain an "anti-abuse rule" which basically prohibits breaking into multiple invoices "a single unit of tangible property."
This opens a huge barrel of worms because the definition of unit of tangible property is extremely convoluted and therefore can have different interpretations depending on specifics of each case and on the CPA whom you ask.
It seems that you merely had different stages of the same renovation project. Chances are that it should be considered a single unit and capitalized. But this opinion is made on incomplete facts of your case.
There are two important alternatives to de minimis that you have not explored, or at least have not mentioned.
A. Does your flooring qualify as personal property eligible for 100% bonus depreciation (yes for carpet, no for glued-down tiles) [Not a reference to my colleague's last name ;)]
B. Does your work qualify as fully deductible repairs rather than capital improvements?
And yes, these questions also have different answers, depending on each case specifics and on each CPA's interpretation.- 7moStan J.Member since 2025 · 43 posts · 8 votesOP
Quote from @Michael Plaks:
Quote from @Stan J.:
I renovated a unit and it looks like it doesn't make sense to depreciate the costs over 27.5 years since the amount is somewhat small. Am I able to immediately expense costs like new flooring, shower tiles/flooring that would otherwise be capitalized? Yes, I'm aware of the $2,500 non AFS limit and each invoice is under that. I'm not aware of a cap though if there is one.
Breakdown:
- 7 invoices total and they're all unique for each part of reno (separate invoice for flooring, shower tile, demo, etc).
- I'm using the total amount for each invoice and the highest one is $2,500. The rest are a couple hundred bucks per invoice or ~$1k (labor)
This is a tricky question subject to interpretation. The Regulations contain an "anti-abuse rule" which basically prohibits breaking into multiple invoices "a single unit of tangible property."
This opens a huge barrel of worms because the definition of unit of tangible property is extremely convoluted and therefore can have different interpretations depending on specifics of each case and on the CPA whom you ask.
It seems that you merely had different stages of the same renovation project. Chances are that it should be considered a single unit and capitalized. But this opinion is made on incomplete facts of your case.
There are two important alternatives to de minimis that you have not explored, or at least have not mentioned.
A. Does your flooring qualify as personal property eligible for 100% bonus depreciation (yes for carpet, no for glued-down tiles) [Not a reference to my colleague's last name ;)]
B. Does your work qualify as fully deductible repairs rather than capital improvements?
And yes, these questions also have different answers, depending on each case specifics and on each CPA's interpretation.Renovations are normally divided up into different projects and each project has its own invoice. The reno should be capitalized, but doesn't make sense because of the unreasonable standard recovery life. Anyway, I replaced the flooring with floating LVP, which is easily replaced (?). None of the work can be considered as repair from what I understand. I decided to do this renovation because the tenant destroyed the unit, but since I'm doing a complete overhaul, it seems like expensing as a repair is not an option for me.
Can I expense labor under de minimis or just the materials? - 7moMichael PlaksPro MemberTax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
Quote from @Stan J.:
Quote from @Michael Plaks:
Quote from @Stan J.:
I renovated a unit and it looks like it doesn't make sense to depreciate the costs over 27.5 years since the amount is somewhat small. Am I able to immediately expense costs like new flooring, shower tiles/flooring that would otherwise be capitalized? Yes, I'm aware of the $2,500 non AFS limit and each invoice is under that. I'm not aware of a cap though if there is one.
Breakdown:
- 7 invoices total and they're all unique for each part of reno (separate invoice for flooring, shower tile, demo, etc).
- I'm using the total amount for each invoice and the highest one is $2,500. The rest are a couple hundred bucks per invoice or ~$1k (labor)
This is a tricky question subject to interpretation. The Regulations contain an "anti-abuse rule" which basically prohibits breaking into multiple invoices "a single unit of tangible property."
This opens a huge barrel of worms because the definition of unit of tangible property is extremely convoluted and therefore can have different interpretations depending on specifics of each case and on the CPA whom you ask.
It seems that you merely had different stages of the same renovation project. Chances are that it should be considered a single unit and capitalized. But this opinion is made on incomplete facts of your case.
There are two important alternatives to de minimis that you have not explored, or at least have not mentioned.
A. Does your flooring qualify as personal property eligible for 100% bonus depreciation (yes for carpet, no for glued-down tiles) [Not a reference to my colleague's last name ;)]
B. Does your work qualify as fully deductible repairs rather than capital improvements?
And yes, these questions also have different answers, depending on each case specifics and on each CPA's interpretation.Renovations are normally divided up into different projects and each project has its own invoice. The reno should be capitalized, but doesn't make sense because of the unreasonable standard recovery life. Anyway, I replaced the flooring with floating LVP, which is easily replaced (?). None of the work can be considered as repair from what I understand. I decided to do this renovation because the tenant destroyed the unit, but since I'm doing a complete overhaul, it seems like expensing as a repair is not an option for me.
Can I expense labor under de minimis or just the materials?Your phrase "doesn't make sense" basically applies to the entire tax code. It was not designed to make sense. It was not designed, period.
I cannot (and neither can my colleagues) give you a responsible specific advice without having a detailed discussion with you. Which would be a consultation. Otherwise, the only generic answer to your questions is, of course, the utterly unhelpful "it depends."
- 7moStan J.Member since 2025 · 43 posts · 8 votesOP
Quote from @Michael Plaks:
Quote from @Stan J.:
Quote from @Michael Plaks:
Quote from @Stan J.:
I renovated a unit and it looks like it doesn't make sense to depreciate the costs over 27.5 years since the amount is somewhat small. Am I able to immediately expense costs like new flooring, shower tiles/flooring that would otherwise be capitalized? Yes, I'm aware of the $2,500 non AFS limit and each invoice is under that. I'm not aware of a cap though if there is one.
Breakdown:
- 7 invoices total and they're all unique for each part of reno (separate invoice for flooring, shower tile, demo, etc).
- I'm using the total amount for each invoice and the highest one is $2,500. The rest are a couple hundred bucks per invoice or ~$1k (labor)
This is a tricky question subject to interpretation. The Regulations contain an "anti-abuse rule" which basically prohibits breaking into multiple invoices "a single unit of tangible property."
This opens a huge barrel of worms because the definition of unit of tangible property is extremely convoluted and therefore can have different interpretations depending on specifics of each case and on the CPA whom you ask.
It seems that you merely had different stages of the same renovation project. Chances are that it should be considered a single unit and capitalized. But this opinion is made on incomplete facts of your case.
There are two important alternatives to de minimis that you have not explored, or at least have not mentioned.
A. Does your flooring qualify as personal property eligible for 100% bonus depreciation (yes for carpet, no for glued-down tiles) [Not a reference to my colleague's last name ;)]
B. Does your work qualify as fully deductible repairs rather than capital improvements?
And yes, these questions also have different answers, depending on each case specifics and on each CPA's interpretation.Renovations are normally divided up into different projects and each project has its own invoice. The reno should be capitalized, but doesn't make sense because of the unreasonable standard recovery life. Anyway, I replaced the flooring with floating LVP, which is easily replaced (?). None of the work can be considered as repair from what I understand. I decided to do this renovation because the tenant destroyed the unit, but since I'm doing a complete overhaul, it seems like expensing as a repair is not an option for me.
Can I expense labor under de minimis or just the materials?Your phrase "doesn't make sense" basically applies to the entire tax code. It was not designed to make sense. It was not designed, period.
I cannot (and neither can my colleagues) give you a responsible specific advice without having a detailed discussion with you. Which would be a consultation. Otherwise, the only generic answer to your questions is, of course, the utterly unhelpful "it depends."
Fair enough lol
- 7moAaron ZimmermanBusiness MemberAccountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votesWas the unit in service already?
Brick House CPAs53 Reviews- 7moStan J.Member since 2025 · 43 posts · 8 votesOP
Quote from @Aaron Zimmerman:
Was the unit in service already?It's can be available for rent, which I believe is the main point if I understand correctly. I'm choosing not to rent to fix other cosmetic details. Can labor be expensed under de minimis?
- 7moAaron ZimmermanBusiness MemberAccountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
@Stan J. Was it advertised for rent/when you bought it were There renters?
Brick House CPAs53 Reviews - 7moStan J.Member since 2025 · 43 posts · 8 votesOP
Quote from @Aaron Zimmerman:
@Stan J. Was it advertised for rent/when you bought it were There renters?
It was occupied when I bought it. I kicked a tenant out and they destroyed the unit. That's why I renovated. That was last year. Most of renovation is done. I could've advertised it last year (or even now), but don't want to until I finish up some things.
- 7moAaron ZimmermanBusiness MemberAccountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
@Stan J. Definitely depends. You could maybe say that the unit was out of service as well depending on how long. Id recommend connecting with a real estate cpa. You are 100% right that the de minimis rule could help you but really depends on in service vs out of service.
Brick House CPAs53 Reviews
- 7moMichael PlaksPro MemberTax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
Warning: I'm one of the most direct posters on BP. No punches pulled.
No amount of technical data is going to do the job here. Because you are not looking for understanding of the rules. You're looking for validation of your determination to deduct it, the rules be damned.
You already decided that the rules don't make sense and you will deduct it. You just want to have your plan endorsed by a CPA. Which none of us can responsibly do. Not without discussing it at depth.
And, as I said before, you might be able accomplish what you want via a different approach, such as repairs. Which also requires a discussion.
But you have made up your mind, and you're not going to change it.
- CPA| New Clients Welcome| 50 States · Member since 2016 · 430 posts · 93 votes7mo
@Stan J., Smart move looking at the De Minimis Safe Harbor, but watch out for the 'Anti-Structuring' rules.
Even if invoices are under $2,500, the IRS generally looks at the 'Unit of Property.' If those 7 invoices are part of one integrated renovation project, they expect you to aggregate the total cost. If the total exceeds $2,500, individual invoices usually can't be used to bypass capitalization.
That said, check if the flooring or tile qualifies under the Routine Maintenance Safe Harbor instead, if it's something you'd reasonably replace more than once every 10 years, you might be able to expense it regardless of the invoice total.
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