Capital or Expense?

Question

Are the following items considered capital items to depreciate or expense for tax purposes?

- Hot Water Heater
- Blown-In Insulation in Attic
- A New Front Door

We also bought a lawn mower and tiled one of our apartments, which I presumed are Capital depreciable items.

Thanks.

Steven Hamilton II · Answer

Dawn,

The hot water heater will be depreciated.(7 Years) 
The insulation will be depreciated(27.5 Years).

The door will be determined if it is to replace a damaged door or to improve it:
If you are replacing the door because of damage that one will be an expense. 
If you are upgrading the door, sidelight and door frame... etc. Than you will be depreciating that(5 Years).
If you are doing both you must depreciate it.

There is not a $100 dollar floor. This is a myth to justify the cost of creating the depreciation schedules for smaller items..

-Steven the Tax Guy

Jeff B. · Answer

As noted, everything on your list is depreciated.  However, the water heater isn't going to be depreciated over the same period of time as the front door or insulation.  Water heater is probably a 5 or 7 yr depreciation where as the door and insulation are much longer.  Talk to your accountant and they can give you the scoop.

Dave Toelkes · Answer

Everything on your list is capitalized and depreciated. Even the insulation.  Insulation is an improvement and is capitalized.

There is a $100 threshold.  If a capital item cost $100 or less, expense it instead of depreciating it.

Expense repairs.  Repairs fix things that are broken

Aaron McGinnis · Answer

I ain't a CPA, but I did stay at a Holiday inn...

The insulation I'd call an expense. Everything else I'd depreciate. Insulation doesn't exactly deteriorate...

Kyle Meyers · Answer

I would capitalize all of them under most circumstances.

Steve L. · Answer

I just let my accountant decide on everything (so take my opinion lightly).

To me it sounds like to me that everything on that list could be a capital item if you want to depreciate it.

Capital or Expense?

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