MAYBE, since you spent $18,000 on the system, this is over the $10,000 limit. The limit is the lessor of $10,000 or 2% of the unadjusted basis of the property. If you are claiming the full $18,000 (which is the total cost for that furnace to get up and running) this would be greater than the $10,000 limit. If you are splitting it with your son 50/50 then it wouldn't be over the limit. When you enter the HVAC system as an asset in TurboTax, it will ask you multiple questions and then give you the option to either take full depreciation (if you qualify), partial accelerated depreciation or depreciate it normally. But again, if you are taking the full cost on your return, you would not be eligible for the Safe Harbor.
This is not listed as an expense because when you dispose of the house, all depreciation will need to be recaptured. So, if you take full depreciation on the system in year 1 and sell it in year 2, that depreciation will need to be recaptured (added back to your income). IF it was something like getting a leak fixed in the basement and you paid $100 for that, that would be an expense.
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