@pk , thank you. As much as I'd love to count it as a "repair" I think the IRS is very clear that this should be treated as a "capital improvement." From the IRS website:
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. Therefore, the furnace replacement is a capital improvement to your residential rental property.
As with the restoration costs discussed above, these costs are 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 the furnace is attached.
Is generally depreciated over a recovery period of 27.5 years using the straight line method of depreciation and a mid-month convention as residential rental property.
https://www.irs.gov/faqs/sale-or-trade-of-business-depreciation-rentals/depreciation-recapture/depre....
