@PatriciaV wrote:
I understand your confusion. An HVAC system is often replaced several times during the life of a residence. But the IRS considers the heating and air conditioning to be a component of the original building, not something that was added later or could be easily removed without compromising the function of the home. For that reason, component systems are depreciated over the same lifespan as the building itself.
It's also worth noting that if you have to replace the HVAC again in less than 27.5 years, you can write off the remaining cost (original minus total depreciation taken) at that time.
That's probably what stymies people, no exception for me. It's the simplest solution to the problem for any capital-budgeting item. The brevity of a depreciation schedule only gets back the investment faster. A long schedule can always be recaptured according to remaining use-life. Here, we're looking at recapture. Maybe people don't "go there" because of the real and imagined arithmetic.
It's a one-time investment in time and effort -- but annual updates to an Excel file of your rental property's expenditure history -- written-off and capitalized -- can include the MACRS-related schedules for different types of property. Another column with annual updates might give "remaining use-life" and "remaining depreciation recapture" or similar.
