The qualified leasehold improvements apply only to nonresidential real property according to the IRS. If you reported this as business income as indicated below, there may be a possibility but continue to review your specific situation.
- IRS Publication 956 (page 30) Printed below for your convenience.
- Qualified improvement property. Generally, this is any improvement to an interior part of a building that is nonresidential real property, and the improvement is section 1250 property, is made by you, and is placed in service by you after 2017 and after the date the building was first placed in service by any person.
- However, a qualified improvement does not include any improvement for which the expenditure is attributable to any of the following.
- • The enlargement of the building.
- • Any elevator or escalator.
- • The internal structural framework of the building.
It's unclear how you treated your Airbnb income but here are some key components. Most people who use Airbnb are running a business and by default are required to file under Schedule C if there is "substantial services".
If you’re providing hotel-like perks such as regular cleaning or maid service (in excess of 10% of the rental cost), fresh linens or towels, in-room coffee, transportation, or sight-seeing, you’re providing substantial services, and that means you'd file Schedule C.
- If you provide substantial services that are primarily for your tenant's convenience, report your income and expenses on Schedule C. If this is the case, then you use the nonresidential real estate like a hotel and/or bed-and-breakfast. This will be the 39 year recovery.
If you did report the income as rental on Schedule E, then there is nothing you can use for depreciation that you did not own as indicated by our awesome tax experts @ColeenD3, @JillS56 and @DaveF1006.
Please update if you need further clarification.
@pbmunkey
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