De Minimis Safe Harbor · 🏠 Lower Taxes w/ Ryan

De Minimis Safe Harbor

Are there any gotcha's I should be aware of? I am DIY installing a mini-split in our garage game room conversion that costs about $2400 and want to expense the entire purchase.

'Essentially, this IRS provision allows you to immediately deduct (expense) the full cost of tangible property or repairs up to $2,500 per item, rather than depreciating those costs over several years as capital expenses. For an STR owner, this is incredibly useful when furnishing a new property or performing upgrades. Instead of "recovering" the cost of a $2,000 sofa over five or seven years, you take the full $2,000 hit against your income in Year 1. This lowers your taxable income right away, keeping more cash in your pocket for the next project. To leverage this, you must have an accounting policy in place at the beginning of the year stating you expense items under this threshold and formally "elect" the safe harbor on your tax return."

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