All Forum Posts by: Craig Poskus

Thank you for the explanation Eamonn!  So it sounds like I can in fact expense these items that cost $2,500 or less since I meet all three of the criteria you listed.  

Craig

Oh fantastic.  Would it be possible to get a quick explanation of how I am confusing the two?

Thanks!

Craig

Good morning everyone!

I think I have a unique situation in that I do not qualify for the de minimis safe harbor election test.  Now the cost of each of my items is below $2,500, however I don't believe I meet the other rules to take the election.

• Your gross receipts, including all your other income, are $10,000,000 or less. 

I do meet this one!

• Your eligible building has an unadjusted basis of $1,000,000 or less.

I meet this one as well!

• The cost of all repairs, maintenance and improvements is less than or equal to the smallest of these limits:
  • 2% of the unadjusted basis of your building or
  • $10,000

I do not believe I meet this one.  My total for repairs, maintenance and improvements comes to well over $11,000...it wasn't a great year for us.  It's also well over my unadjusted basis so that is moot.

1) My question is can I now not take the safe harbor election for any of these items and must I depreciate everything over 27.5 years?

2) Or can I take it for just up to the $10,000 limit and depreciate the rest?  

3) Or do I expense the maintenance and repairs, which are roughly $6,000 and depreciate the $5,000 in improvements?

Please let me know if I missed any details or can provide anything else to help me solve this problem.

Thanks!

Craig

Thank you everyone for the responses.  In general, how much does a cost segregation professional generally charge for a multifamily with 4 units?  Also, can this charge be expensed under professional fees on the Sched E?

Lastly, I read in another post regarding if items are under $2,500 they can be expensed immediately.  Is this the case only if the unit is currently being rented or can this apply to a unit that is being renovated?

Hi BP Folks!

My search skills must be weak and I apologize in advance for not being able to locate the answer to my question.  I am trying to find out what capital improvements go in which bucket for cost segregation depreciation.  For instance, I know appliances (ie stove or refrigerator) go in the 5 year bucket, however what about windows, floors or decks?? The IRS publication 527 does not appear to be much help.

My reason for asking is because I bought a multifamily unit and have done ~$75,000 of upgrades to the property.  Now I figured this would be an issue, therefore I have receipts scanned as well as a list in Excel of every item purchased from nails to bath tubs.  My issue is now determining what depreciation bucket to put each item in.  

I know Steven Hamilton is the guru in this, but its tax time and I know he's extremely busy.  Could anyone who has been through this before assist me in this situation.  I would really hate to put all this to 27.5 year depreciation...

Thanks in advance!!

Craig

I ended up taking this credit against the basis in the property.  I figured either way I did it (a) take it against rental expenses next year or (b) reduce my basis in the property this year, I was achieving the same thing.  It just came down to when I wanted to recognize that income.

Thanks for the response JD.  So you are absolutely positive the property tax credit on the closing statement reduces the basis in the property?

Craig

I bought a rental property in September 2016 and received credit on my closing statement for property taxes for $3,000.  I paid property taxes  of $4,600 in January 2017 for the 2016 tax year.  From what I have researched, I should apply this $3,000 credit against the taxes I paid of $4,600, and thus I would report on my Schedule E total taxes paid of $1,600.  

The dilemma I have is I plan to use cash basis.  Therefore I received the credit in 2016 and paid the taxes in 2017.  Should I just wait until filing my 2017 taxes to use the $3,000 credit and ultimately report the $1,600, or should I use the $1,600 when filing my 2016 taxes?

Thank you for your help!

Craig

 Thanks Paul.  Please let us know what he says.

Sorry to bring this thread back, but I just cannot find an answer on whether to expense or capitalize tools used to remodel/rehab a rental unit.  I have read some on the forums about de minimis and a $500 threshold per item/invoice but am still uncertain of the proper tax treatment.

These would be tools such as a small compressor, wall texture sprayer, hammer, pry bar, chalk line, broom, safety glasses, multi tool, trash bags etc etc.  All in all it totals up to ~$700 so far.  For these tools and misc supplies, do I capitalize them, expense them, or neither of the above. 

Thank you for the response!