Hello Tax guy Bill,
I searched all over the net but I think you have given a very good answer.
I am doing my 2018 taxes.
I have a similar situation where the original hvac cost is included in the original cost basis of the house. I had to replace the old hvac with a new hvac for $4700. I am depreciating the new hvac of $4700 for 27.5 years as a new asset
but the problem arises in separating the old hvac cost from the cost basis of the house.
I have tried something as under. Can someone guide me, if this correct as per IRS rules.
Cost of house on 6/2013 - 110000
total depreciation on the house from 2013 to 2018 = 18167
Final Demand Method
PPI data index(commodity) : 109.2 (June 2013) and 116.4 (Aug. 2018)
% diff. between 2 indices 6.593%
so cost of old Hvac as of 06/2013 : 4700 / (1 + 6.59%) = 4409
House cost as on 06/2013 : 110000 - 4409 = 105591
house Depreciation on 105591 from 2013 to 2018 = 17439
So old Hvac depreciation = 18167 - 17439 = 728
Does it make sense? And if it is correct, How can I put it into Turbotax
