Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Tax, SDIRAs & Cost Segregation
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 7 years ago on . Most recent reply presented by

User Stats

14
Posts
0
Votes
Mike G.
  • Colorado Springs, CO
0
Votes |
14
Posts

Requesting help in understanding safe harbor applications

Mike G.
  • Colorado Springs, CO
Posted

Hi BP,

I recently incurred significant expenses for the exterior of one of my properties, and am requesting your assistance in understanding what I may be able to deduct in the current year.  I would classify each of the below items as either a betterment, adaptation, or restoration, so it would fall under the 'improvements' side of the 'repairs vs improvements' argument.  However, I am hoping to gain clarification as to whether any of these expenses (improvements) would be currently deductible under any of the safe harbor elections.

Here are the facts:

  • The basis of the property is $115,000, and is currently in service (tenants are in the property)
  • Separately invoiced items:

1. Replace warped boards on deck and house= $350

2. Remove/replace gutters and downspouts= $1100

3. Remove/replace exterior doors= $2100

4. Remove/replace garage door= $1000

5. Remove/replace all windows= $2500

6. Paint entire exterior of house= $2400

7. New stove= $400

TOTAL= $8460

  • Here is my logic:

1. safe harbor for small tax payers. I don't think that it falls under the safe harbor for small tax payers, since it exceeds the annual expense limit (2% of $115,000= $2300), and because I must count everything spent during the year, if I exceed the $2300 (which I do), I cannot count any of it towards this safe harbor.  In this case, $8460 exceeds $2300, so it renders me unable to use this safe harbor.

2. De minimis safe harbor.  The only item that would be considered personal property is the $400 stove.  Since the $400 stove is less than $2500, then I may elect to use this safe harbor and deduct the cost of the stove.  Can I count any of the other items under the de minimis safe harbor election? I don't think so.

3. Routine maintenance Safe Harbor. Would not fall into this, as they were betterments and restorations.

Based on the above, must I capitalize everything other than the new stove?

Your help is very much appreciated!

Loading replies...