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I maybe aggressive, but i would depreciate any tool purchased directly for its initial use on a rental property. Any subsequent use is de minimis, in my opinion as long as the equipment was truly purchased for work on the rental unit. What do you have to lose. I do not think that there are many IRS auditors that would want to take the case to appeals if you purchased a tool with a receipt dated during a period that included other receipts for repair work for a rental unit. My experience is that over 90% of IRS auditors will agree to allow a deduction as long as you have any reasonable argument.

If you purchase a tool for less than $100 dollars i would expense it. Every business has a threshold for capitalizing assets and i have never had an IRS agent adjust for an item under $500.

But if you buy a $700 drill press during a period with no other work is done to the rental, you will lose the entire deduction for sure.

I know phil hates to hear about what would happen in an audit but i think that is the bottom line

I can think of no reason to capitalize tools for a schedule E rental, there might be something under self constucted assets.

Good luck
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