Solved: I have 3 rental properties bought 2018, and I would like to partially 'elect out' of bonus depreciation of the 5yr assets of ONLY one of the properties. Can I do it?
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New Member

I have 3 rental properties bought 2018, and I would like to partially 'elect out' of bonus depreciation of the 5yr assets of ONLY one of the properties. Can I do it?

See attached highlighted screenshot from IRS. As I have 3 rental properties, it is not clear what does it means that election "applies to all qualified property that is in the same class of property...". By electing out on one property, does it obligate me to not take bonus depreciation for 5 yr asset class also for the other 2 properties?  

1 Best answer

Accepted Solutions
Anonymous
Not applicable

I have 3 rental properties bought 2018, and I would like to partially 'elect out' of bonus depreciation of the 5yr assets of ONLY one of the properties. Can I do it?

here is  abstract from IRS publication 946 - depreciation

and 168(k)(7)

How Can You Elect Not To

Claim an Allowance?

You can elect, for any class of property, not to deduct any

special depreciation allowances for all property in such

class placed in service during the tax year.

To make an election, attach a statement to your return

indicating what election you are making and the class of

property for which you are making the election.

The election must be made separately by each person

owning qualified property (for example, by the partnerships, by the S corporation, or for each member of a consolidated group by the common parent of the group).

168(k)(7) Election out

If a taxpayer makes an election under this paragraph with respect to any class of property for any taxable year, paragraphs (1) and (2)(F) shall not apply to any qualified property in such class placed in service during such taxable year. An election under this paragraph may be revoked only with the consent of the Secretary.

however TT will allow you to elect out on 1 property but will allow bonus for the same class on other property?


personally, since the election is made at the taxpayer level, I think TT does  it wrong.  

View solution in original post

7 Replies
Anonymous
Not applicable

I have 3 rental properties bought 2018, and I would like to partially 'elect out' of bonus depreciation of the 5yr assets of ONLY one of the properties. Can I do it?

here is  abstract from IRS publication 946 - depreciation

and 168(k)(7)

How Can You Elect Not To

Claim an Allowance?

You can elect, for any class of property, not to deduct any

special depreciation allowances for all property in such

class placed in service during the tax year.

To make an election, attach a statement to your return

indicating what election you are making and the class of

property for which you are making the election.

The election must be made separately by each person

owning qualified property (for example, by the partnerships, by the S corporation, or for each member of a consolidated group by the common parent of the group).

168(k)(7) Election out

If a taxpayer makes an election under this paragraph with respect to any class of property for any taxable year, paragraphs (1) and (2)(F) shall not apply to any qualified property in such class placed in service during such taxable year. An election under this paragraph may be revoked only with the consent of the Secretary.

however TT will allow you to elect out on 1 property but will allow bonus for the same class on other property?


personally, since the election is made at the taxpayer level, I think TT does  it wrong.  

View solution in original post

Level 15

I have 3 rental properties bought 2018, and I would like to partially 'elect out' of bonus depreciation of the 5yr assets of ONLY one of the properties. Can I do it?

Since each property is entered and treated separately on the SCH E, you'll find that each property will also have their own individual IRS Form 4562 for the property assets also. So it's no problem for you to depreciate 5 year property on one rental, over 5 years,, and then to take the bonus depreciation on the same type of asset that is being used on another property.

Level 9

I have 3 rental properties bought 2018, and I would like to partially 'elect out' of bonus depreciation of the 5yr assets of ONLY one of the properties. Can I do it?

No, you are not allowed to do that.

If you elect out of Bonus depreciation for 5 year property, that election applies to your entire tax return.  So if you elect out, you elect out for all 5 year property.

If you decide to elect out of Bonus Depreciation, and want a bigger deduction for the other two properties, you may still be able to claim Section 179 on those assets.

New Member

I have 3 rental properties bought 2018, and I would like to partially 'elect out' of bonus depreciation of the 5yr assets of ONLY one of the properties. Can I do it?

Isn’t Sec 179 allowed only for non-residential properties, which is not the case here (3 SFHs)?
Level 9

I have 3 rental properties bought 2018, and I would like to partially 'elect out' of bonus depreciation of the 5yr assets of ONLY one of the properties. Can I do it?

Not anymore.  That restriction was removed starting in 2018.
Level 15

I have 3 rental properties bought 2018, and I would like to partially 'elect out' of bonus depreciation of the 5yr assets of ONLY one of the properties. Can I do it?

I can recall in 2017 and prior that while you could take the bonus depreciation on qualified rental assets, SEC 179 was not available for residential rental property. I presume because it was passive. But that restriction went away with tax reform.
Level 9

I have 3 rental properties bought 2018, and I would like to partially 'elect out' of bonus depreciation of the 5yr assets of ONLY one of the properties. Can I do it?

The pre-2018 restriction was not against passive activity, but the restriction included "property used for lodging".  The 2018 tax return specifically made a change to allow "property used for lodging".
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