One time special depreciation

[Face_in_the_crowd]

For 10 months of 2016 (and 1 month of 2017) I rented my residential home. This was a one time deal. I am now back living in my home and do not plan on renting it again. In late 2016 (August) the refrigerator and dryer broke down and I replaced them with new units. In TurboTax I elected to do this "one time special depreciation" in addition to just "depreciation". The special depreciation amount is nearly half the cost of these appliances, yet there was only 5 months of actual use for rental (business purposes). Am I actually allowed to take these big special depreciation deductions? Maybe I'm wrong but it seems like the IRS is assuming that I will continue to rent the house, when I actually will not.

[PatriciaV]

Yes, you may report assets for a property rented during the tax year. As long as you didn't buy and sell the assets in the same year, you may take any available depreciation expense. But you are not required to take special/bonus depreciation - you can accept regular depreciation instead.

Note that you may be subject to "depreciation recapture" when you report that you converted the rental back to personal use. Basically, you pay taxes on the amount of depreciation you took if you dispose of the asset before its useful life is over. TurboTax will help you with that next year.

[Face_in_the_crowd]

Not required? But if it's allowed and it's reducing my taxes why wouldn't I? I guess a better question is SHOULD I when considering that these appliances are only going to get 5 months of business use? (note: purchased appliances in 2016, stopped renting my house in 2017 and now using appliances for personal use)

[PatriciaV]

Yes, that is the point. If you take special depreciation, you have more to recapture. If you depreciate over useful life (5 yrs) and sell in that time, you have less to pay taxes on. Only you can decide if it's worth the risk to take the larger deduction now.

[Face_in_the_crowd]

I don't plan on selling these appliances. I will keep using them for myself until they wear out. I am done renting my house. Do not plan on re-renting.

[Face_in_the_crowd]

Risk of what?

[PatriciaV]

Risk of later tax on recaptured depreciation. You know your tax situation, so it's your decision.

[Face_in_the_crowd]

It should be definitive because as I said, I'm never renting the house again. Anybody else want to weigh in?