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HVAC Drepeciation in Residentila Rental

Forum|Forum|3 years ago
February 20, 2023
2 replies
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Hi,

3 questions regarding my residential rental

1. TT is letting me depreciate my $8900 entire HVAC prior to Jan 1 2023. But the software never gave the option to choose heating and ac as a definition or category. Is this a sec 179 on the minimus?

2. Are the install fees. permits, labor an expense

3.if I choose to depreciate over years the software says that it is a 5 year depreciation? Help??

Thanks in advance,

james

Best answer by AnnetteB6

An item that costs $8900 cannot be deducted under the de minimis rule. The cost must be under $2500 to qualify for that special tax treatment. Also, section 179 treatment is not available for rental properties.

Installation fees, permit costs, and labor for installation are included in the total cost of the HVAC, not just the cost of the HVAC unit itself. You would not deduct those expenses as a separate item on their own.

Depreciation of a new HVAC unit is over 27.5 years, not 5 years. If it is a central unit that becomes a component of the house itself, then it is depreciated over the same time period as the house. You would choose 'Residential Rental Real Estate' as the asset category when entering the information for depreciation.

A

AnnetteB6Answer

An item that costs $8900 cannot be deducted under the de minimis rule. The cost must be under $2500 to qualify for that special tax treatment. Also, section 179 treatment is not available for rental properties.

Installation fees, permit costs, and labor for installation are included in the total cost of the HVAC, not just the cost of the HVAC unit itself. You would not deduct those expenses as a separate item on their own.

Depreciation of a new HVAC unit is over 27.5 years, not 5 years. If it is a central unit that becomes a component of the house itself, then it is depreciated over the same time period as the house. You would choose 'Residential Rental Real Estate' as the asset category when entering the information for depreciation.

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J

jamesvengAuthor

Thank you so much!

I am still unclear as to how to enter it in the description?

Is it real property or equipment?

Thanks in advance,

james

AmyC

Employee

The HVAC is entered as a stand alone item. When entering in the program, we have to look at the class life to determine the right answer. Rental real estate option will depreciate over 27.5 years, which is what we want. So, the wording may not say HVAC, but that is the correct place for it. If you chose equipment, the depreciation would not be right.

Reference: Publication 527 (2022), Residential Rental Property - IRS shows in table 1-1 that HVAC is an improvement. Table 2-1 shows 27.5 years of depreciation.

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Carl11_2

Employee

A new central air unit becomes "a physical part of" the structure. Therefore it's classified under MACRS as Residential Rental Real Estate and get depreciated over 27.5 years. It is not eligible for SEC 179 or SDA. Since it was more than $2,500 it's also not eligible for safe harbor.