how to deduct a not fully depreciated replaced on a property rental

Forum|Forum|5 years ago
March 4, 2021
2 replies
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I have replaced a air conditioning unit on my rental property, which it was not fully depreciated. BTW my rentals are in a Corporation C, so I do not itemized. Should I report it as a zero sale or deduct it as business expense. Also please tell me what forms to use. Thank you.

TurboTax Business Windows

JohnB5677

A rental property should be on a schedule E. If it is not it will cause problems down the line. You can set up a Schedule C for management control, but the properties themselves should be on a Schedule E.

If the original air conditioner was not fully depreciated you will have to dispose of it as an asset. You will post the final value as zero and the reminder of the depreciation will flow into your return.

The replacement air conditioner should be setup as a new asset.

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bostermanAuthor

Hi John:

Thank you, although I am not sure these forms apply to my 1120 corporation tax return. Anyway, I understand that I have to zero sell the replaced air conditioner , but do not know what forms are the right ones.

tks

Carl11_2

Employee

I think @JohnB5677 may have mis-read your post.

Your rental is in a C-Corp. Therefore, SCH E is not used with the 1120 return.

Simplest thing to do is to report the asset sold for $0. That will automatically deduct the remaining depreciation and reduce the overall cost basis total of all of your remaining assets.