Replacement of the furnace in your residential rental property: is generally a restoration to your building property because it's for the replacement of a major component or substantial structural part of the building's HVAC system.
It is a separate asset with a new placed-in-service date and are in the same class of property as the residential rental property to which they're attached. Generally, you depreciate over a recovery period of 27.5 years using the straight line method of depreciation and a mid-month convention as residential rental property.
There is a Safe Harbor Election for Small Taxpayers whose average annual gross receipts is less than or equal to $10,000,000. You may elect to not capitalize amounts paid for repairs, maintenance, or improvements of certain eligible building property if the total amounts paid during the taxable year for such activities don't exceed certain dollar limitations.
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