2 new Heaters, Invoice has just 1 big price on it

Rental Property Investor · Phoenix, AZ · Member since 2015 · 224 posts · 50 votes

Hi. After I closed on my new 5-unit property this past december, I had to replace two heaters that were at their end of life and malfunctioning. The total cost was $9,900. I just realized that the HVAC company did not break down that cost into things like labor, etc. If I'm understanding the terminology and process correctly, I should be getting them to itemize each part of the repair/replacement so that I do not have to capitalize the entire $9,900, correct?

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Matthew Paul
Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
7y
Nope , You paid for a total job . If you had a service call for a repair , time and materials . Now you may ask the company and they may provide you , but thats up to them .
I dont know how your state handles sales tax , but if you ask for a different bill broken down , dont be suprised if they charge you additional for sales tax .
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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
7y
Originally posted by @Ryan Moore:

Hi. After I closed on my new 5-unit property this past december, I had to replace two heaters that were at their end of life and malfunctioning. The total cost was $9,900. I just realized that the HVAC company did not break down that cost into things like labor, etc. If I'm understanding the terminology and process correctly, I should be getting them to itemize each part of the repair/replacement so that I do not have to capitalize the entire $9,900, correct?
In your situation, it really does not matter because you don’t qualify as the amount would be greater than the safe harbor amount of $2500 even if two replacements were itemized.
If each of them (material, installations plus taxes) were below 2500, then yes you could have deducted them this year. If you do not meet the safe harbor amount, you need to capitalize the amount and depreciate it.
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Ryan Moore
OP
Rental Property Investor · Phoenix, AZ · Member since 2015 · 224 posts · 50 votes
7y
Originally posted by @Ashish Acharya:

In your situation, it really does not matter because you don’t qualify as the amount would be greater than the safe harbor amount of $2500 even if two replacements were itemized.
If each of them (material, installations plus taxes) were below 2500, then yes you could have deducted them this year. If you do not meet the safe harbor amount, you need to capitalize the amount and depreciate it.
Ok, I could have sworn I heard numerous CPAs mention that when you have a big repair and capital expense, get things broken down so that some of the line items can be expensed.... but I guess it was referring to when a bill can be broken down to where all parts fall under the amount allowed to be expensed. In my situation, even if labor and whatnot were line items, then yeah the heaters would still be above the amount, which I'm understanding keeps the whole thing capitalized. Thanks for the input
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