Commercial Rental Building New HVAC Depreciation

[Viejo303]

Using Desktop H & B the choices to enter a new depreciable asset, a replacement HVAC system (gas furnace and outdoor AC unit) are skimpy, none mentioning HVAC equipment. 

The initial choices are (1) Rental Real Estate Property (which takes it to several choices, none of which mention HVAC) (2) Computer Video, Photo & Telephone Equipment, none of which are applicable (3) Tools, Machinery & Furniture, none of which appear to be applicable and (4) Intangibles, which surely isn't right. 

As this is a commercial building and the new HVAC is replacing a 1999 system, which is the right entry to start with and take it through? For a program that is supposed to offer extra help for rental properties this is lacking.

[RobertB4444]

I know Rental Real Estate doesn't feel like the right category but it definitely is.  You will depreciate the new HVAC system for 27.5 years alongside the rest of the rental house.

[Viejo303]

As stated in my post this is not a house, it is a commercial building. That said, maybe Rental Real Estate may be the correct first choice, but that takes me to 3 new choices: (1) Residential Real Estate, which it isn't so it can't be that (2) Appliances, Carpet & Furniture , which an HVAC system isn't (3) Land Improvements, which this also isn't. 

 #2 may be the closest possibility, but that takes me to more choices including residential items, condos, etc., none of which seem to be the correct category again.  This must be a common depreciable item for commercial properties, what is the correct choice?

[AmeliesUncle]

You correct that HVAC is a different category than those other things, because special rules can apply to commercial HVAC.

I suspect it is there somewhere.  What are the sub-categories under Rental Real Estate?

[Viejo303]

3 categories to chose from, (1) Residential Rental Real Estate (2) Appliances, Carpet, Furniture (3) Land Improvements.  That's it.

[AmeliesUncle]

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@Viejo303 wrote:

3 categories to chose from, (1) Residential Rental Real Estate 

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I was first going to ask if the Rental Real Estate then has sub-options after that, but then I noticed ...

... it says "Residential", but you said you have a Commercial property.  I'm wondering if you entered something wrong in the early part of the rental section, and missed entering that it is a commercial property?

[Viejo303]

No, this has been on Turbotax for nearly 30 years of commercial building depreciation. Shows as such in the depreciation reports. This is not something new for Turbotax. I looked back at my last depreciable big ticket item in 2017 and some from earlier and the step-by-step questions were about the same. I must have had to  muddle my way through form 4562, guessing on entries and then generally taking Section 179 each time when I could.  I also installed new asphalt in the parking lot in 2025 but that one was easily determined to be Land Improvements and the step-by-step was fine for that.  But TT is really lacking on this HVAC depreciation subject for a commercial property owner. They insist the H & B product is perfect for landlords. Not so.

[AmeliesUncle · Accepted solution]

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@Viejo303 wrote:

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Are you using the Desktop/downloaded version?

If so, are willing and able to go to the "Forms" mode to enter it?  You would create a new "Asset Entry Wks" for the HVAC.  For the category for HVAC that is both indoors and outdoors, you would choose the "Roofs, HVAC/FIre/Alarm/Security" (39/40 years, maybe labeled as "J6").  That will properly categorize it and allow you to use Section 179 (if it was only indoors, "Qualified Improvement Property" would be the best category).

[Viejo303]

It's the desktop version for Windows. I understand what you're saying about manual entry, in fact I have done that just while waiting and poking around. There are literally so many depreciation periods to choose from it's over my head, but I will likely end up with exactly what you say unless another wizard has some advice. My goal is to Section 179 it, and hope for the best. Thank you for your comments. I don't understand why TT doesn't cover this in the step-to-step section or even have a help section for these type of entries.