Do I classify both a central air conditioner and furnace as a rental asset with a depreciation life of 27 1/2 years and add them to properties' basis?

[charjean471]

I have a rental property that I paid $3,700 for a central air unit and new furnace.  I have another property that I paid $1,850 for a central air unit.  Do I classify both the a/c and the furnace as assets that have a depreciation life of 27 1/2 years.  Do I add both assets to the properties' basis?  That is how I have it set up now.  I wanted to make sure because I saw one answer stating that a central air conditioner could be classified as having a life of 7 years because it was not in the list of assets.  I had these properties for years before installing the air conditioners and the furnace.   Thank you.

[charjean471]

Appreciate

[Rick19744 · Accepted solution]

The IRS issued final regulations for real and tangible personal property a couple of years ago.  They are attempting to plug some gaps that were used previously.  These are complex and beyond the scope of this forum.

Having said that, the structural components of a building are depreciated using the same life and method as the building itself. Components of a central heat or air conditioning system (whether in, on or adjacent to the building) are classified as structural components of the building.  As such, these should be set up as a new asset and depreciated over 27.5 years.

[charjean471]

Thank you.  Big help.

[Reyesrealestate]

The reg's are what they are. But, in most cases  are not rooted in economic reality as far real estate. Very few if any replacement central A/C units last longer than 7 years or econimically to maintain particularily in hot climates after that.