Hello, small time LL here. I only have one rental a SFH. Last year i did about 12K in remodeling. Just painting, flooring, deck repair, roof repair, gutters installed, couple new windows and front door, etc.

Can i deduct the total expense or do I have to do annual depreciation?

The de minimus safe harbor is $2,500. I've been told that if each item is split up onto different receipts that are below that amount, you can expense. That's typically how I do it.

The catch may be if you did all the jobs around the same time as one big "remodel" project. If yes, it's possible the IRS would view that as all capital expense. However, if you did windows in Feb, painting in April, deck in June, roof in Sept, and gutters in Nov, and during some or all of that time a tenant was living there, then that would probably be piece-meal enough to expense everything.

The roof and deck repairs are probably okay to expense, since the word "repair" usually means you don't have to capitalize the expense. You are simply prolonging the life of a capital asset that was damaged.

My thoughts are you'll have to depreciate at least the flooring, gutters, new windows and anything new which is attached to the property. You should be able to expense the painting (assuming it was not completely repainting all the interior, just a few rooms touch ups or completely repainting the outside, just touch up a few spots ), deck repair, roof repair (if it's not a complete new roof, just a roof tune-up).

Listen to Sid about the Safe Harbor election. And, if you happen to have a single receipt that total above $2500, if it is a bunch of things that make up that amount you are okay still, if you have the receipt to prove that.

To add on to Sid input:

If you are wanting to deduct all that expense in just one year, break up that $12,000 into pieces (systems) with each system being less than $2,500 each.

Just the same, with that much in "repairs" - how well prepared are you in defending the concept that the $12,000 was actual repairs and not system upgrades. At the $12,000 level, you are flirting with a question that might well come back to haunt you.

If I were in that position - especially with only one rental, I would depreciate one system that might be just over the $2,500 thresh hold and than expense the balance.

Personally, I don't see the benefit over the long term of taking the expenses, especially if you believe you are doing something that might trigger an audit.

Was the property a rental of YOURS prior to upgrading? If it was do the deduction THIS YEAR. (I'm not sure what the break it into segments mean because there is no segments section on your tax return.

If you purchased the property did the repairs and fix up-- now you add to cost base of home and divide by 27.5 yrs.

Many many investors make this mistake. Once you get more property's you can PRE plan your purchases for OTHER property's in the fold already. bEFORE YOU EVEN CLOSE ON THE NEW PURCHASE YOU CAN BUY THINGS FOR YOPUR EXISTING RENTALS AND JUST USE THEM for the new one coming up.

For example if you put in 12K in fix up-- and it was a rental already deduct from your profits. If not you get to take 12K divided by 27.5 yrs. I don't know about you but JG Wentworth says it well-- its my money and I WANT IT THIS YEAR!!!

It all works great until an audit.

Expense it.

Nolo Publisher's 'Every Landlord's Tax Guide' by Stephen Fishman. Available in ebook at Nolo Publisher's, or in print at Barnes and Noble online. Or, at least it was when I bought in December. Another tax book often mention is by Lassiter, though I haven't ever used them, so I am neutral about recommending them.

There used to be such a thing as General Plan of Improvement, that was implemented by case law ( a judge created it in the ruling on a case,) but that has been eliminated. Basically, now it goes by systems of a building. Plumbing system , electrical system, hvac system, et cetera. If I recall, IRS labeled ...hmmm.. nine systems? Anyway, does the work done substantially extend life of the system? Questions such as that go into the expense vs depreciate question.