Safe Harbor Questions

[Derek B.]

I am trying to understand the safe harbors as it relates to expensing rather than depreciating items.  I've read some of the forums and blog posts, and everyone's examples always seem to be slightly different than mine and I want to make sure I approach this correctly.

Under SHST, can I expense the cost of an improvement (in this case, a new water heater) fully in the year it's placed into service?  The only other assumption I would want to clarify is regarding annual expenses less than 2% of the unadjusted basis - I assume this is for maintenance and repair expenses, not the sum of all expenses (interest, taxes, 27.5 year depreciation, etc)?

Thanks for any guidance you all can offer.