Rental Assets vs. Expenses

Forum|Forum|7 years ago
June 5, 2019
2 replies
2 views

I have had a rental property for 5 years and have been depreciating the assets (appliances). However there is a change this year that new assets can be treated as expenses, which is great. However, do I still get to take the remaining depreciation from the old assets?

extramilephoto

Level 2

I think that is a very practical example of how to interpret this new rule. Thank You! I have a similar question. In previous years, if you purchased a $900 window A/C unit, you would claim that as an expense, right? So, given the limit of $2500 with the new rule, how does this benefit, since I would still end up claiming it as an expense anyway? I'm not familiar if there is a cost factor when deciding if something as an asset to be depreciated, so perhaps I'm wrong in thinking it would be included as an expense to begin with.?

Carl

Level 11

YOu don't change any of your existing assets. LIke you said, the change is for "new" assets. So from this point forward, if you purchased any new assets in 2015 that are under $2500 ($500 if in CA) then you have the option to either depreciate, or expense them.

What I've decided for my rentals, is that if the asset does "in fact" become "a material part of" the property (such as a new central A/C blower unit which cost just under $2500) then I'll deprecate it. But if it's not "a material part of" the rental, (new range for example) then I'll expense it.

TaxGuyBill

Level 13

Items over $200 (and have a useful life of over 1 year) are assets that are depreciated. So the $900 window A/C unit would be depreciated.

If you qualify to make the De Minimis Election (and actually MAKE the election), that $200 amount is increased to your set amount (up to $2500). So items under that amount can be deducted in one year.