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Inna R
Level 1

Capitalizing or expensing

I had to replace a heat pump at my rental property. The cost of the new unit was $13500. I also had to pay $2500 to weld a metal support frame for it. What of these I can fully expense on my 2020 tax return? Thank you.

2 Comments 2
gayatriluthfias20
Level 7

Capitalizing or expensing

Hi @Inna R , thank you have posted in quickbooks community.

 

Record it as assets (i.e dr equipment cr cash) if you don't sell it. 

 

Glad to assist you.

Rustler
Level 15

Capitalizing or expensing

@Inna R 

 

Because they are both required at the same time for installation, add the two costs and enter the total, 16K as a fixed asset.

 

The fixed asset should be a sub account of the fixed asset building account and it uses the same depreciation schedule as the rental property but posts its depreciation to its own account. ie...

 

123 some street

>> land
>> building

>> >> accumulated depreciation building

>> heat pump

>> >> accumulated depreciation heat pump

 

at tax time talk to the tax accountant about bonus depreciation if you still want to try to take as much of it as you can as an expense as opposed to using annual depreciation

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