Depreciation of appliances

[PappyCougar]

I purchased a refrigerator for a rental. I previous years a 7 year depreciation period was used. This year, TurboTax assigned a 5 year depreciation period to this item and will not let me complete the write off. Is there any way the depreciation period can be adjusted in TurboTax?

[DavidS127]

Go back though the asset entry for that refrigerator.  The 5 year versus 7 year happens during that original asset entry in the TurboTax asset entry questions.

Use the Section 179 deduction or the 100% bonus depreciation if you are trying to write off the asset in the first year of use.  Or, if the cost of the refrigerator isn't over $2,500, you can choose to just deduct it as an expense the first year.  That choice is also offered by TurboTax when you start to enter the asset, and explained in IRS Publication 535 at this link.

The TurboTax article on Depreciation of Business Assets at this link provides a great overview of how assets are deducted for tax purposes, and may help you with your choice.

[Anonymous]

from irs publiction 946

5-year property.
a. Automobiles, taxis, buses, and trucks.
b. Any qualified technological equipment.
c. Office machinery (such as typewriters, calculators, and copiers).
d. Any property used in research and experimenta-tion.
e. Breeding cattle and dairy cattle.
f. Appliances, carpets, furniture, etc., used in a residential rental real estate activity.

[Carl]

I suggest you quit wasting time and effort to depreciate a simple refrigerator. Since it cost less than $2,500 and does not become "a physical part of" the property you are renting, you can just expense it and be done with it once and for all, forever.

If you expense it, you deduct the cost permanently and forever. If you depreciate it, then when you sell or otherwise dispose of the property you are required by law to recapture all depreciation taken and pay taxes on it in the year you sell it.

Depreciating something as cheap as a refrigerator doesn't make one single penny of difference in your tax liability. But when you recapture the depreciation in the year you sell, that recaptured depreciation gets added to your AGI and has the potention to be "just enough" to bump you into the next higher tax bracket.

So I suggest you expense it since it qualifies for that, and be done with it forever.

[zerolfs]

Thanks for linking the article but why does it say 7 years for appliances? Is that wrong?

• Seven-year property (including office furniture, appliances, and property that hasn't been placed in another category)

[ColeenD3]

@zerolfs

Rental has a shorter useful life that the same asset for Schedule C business. Renters are rougher on assets than owners.