Rental asset disposition

Forum|Forum|1 year ago
March 11, 2025
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I replaced the HVAC at my rental in 2024. I had no problem adding this as a new "residential rental real estate" line item to be depreciated over 27.5 years. However, I'm having trouble figuring out how to dispose of the original HVAC for tax purposes.

Why? Because the original rental put into service over a decade ago includes a guestimate of the used HVAC as one combined line item (building + HVAC). My old accountant assumed a used HVAC price of $2k.

Do I need to fix this original entry in my TurboTax software first to break out the used HVAC cost currently being depreciated over 27.5 years before I can dispose of it in the software? If so, what is the easiest way to do this in TurboTax at this point?

Best answer by DavidD66

You might want to consider not doing anything with the old HVAC in TurboTax. It might be more trouble than it is worth. You will need to delete the original house + HVAC asset and re-enter as two separate assets. You will need to make sure that the accumulated depreciation for the new assets meets the accumulated depreciation for the old asset. To do that, if you aren't already I strongly recommend you use TurboTax Desktop so that you can access the underlying Asset Worksheets and, if necessary, make changes directly on the worksheets. I also recommend making and saving a copy of the original TurboTax file before you delete anything.