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.
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.
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.