To set up this property as a 40-year asset under Assets/Depreciation, choose "Intangibles, Other property," "Other Asset type," and enter the specific property information. Under Asset Class, choose "Residential Rental" asset class (ignore the 27.5), and Alternate Method (ADS) depreciation method. These choices should result in a recovery period equal to 40. Check the "Show Details" box to confirm under the current year estimated depreciation amount.
You have the option to change the recovery period to 30 years under the Taxpayer Certainty and Disaster Tax Relief Act using Form 3115, although you may prefer to retain the original depreciation options for the remaining years. See this article for more information.
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