Here's my interpretation of the tax statues on this.
Anything classified as "Residential Rental Real Estate" under MACRS is not eligible for SEC179. Period,
Additionally, while other things may qualify for Special Depreciation Allowance, or Safe Harbor, The actual structure and those components that become a physical part of the structure do not. They get classified as Residential Rental Real Estate and depreciated over 27.5 years.
The plumbing system is without question, a physical and permanent part of the structure. Likewise, the water heater is a permanent and physical part of the plumbing system. Therefore, SEC179, Special Depreciation and safe harbor is not an option for the water heater regardless of it's cost. It gets classified as residential rental property and depreciated over 27.5 years.
Now I've known others to clasifiy a water heater as an appliance that gets depreciated over 5 years and then take the SDA on it so they could depreciate it completely in the first year. By my interpretation of the tax statutes, that's not right.
