The recent tax act changed special depreciation to 100%. If you want to only take 50% for depreciation this year, you can select I'll take partial section 179 deduction this year (on the same screen where you selected special depreciation).
As long as the HVAC was purchased and placed in services for your business or rental, you'll have this option. Also, there are thresholds for purchasing new assets, but you'll see the total amounts you have available when you select the option.
Let me know if you have any questions.
From IRS pub 946
Qualified section 179 real property. You can elect to treat certain qualified real property you placed in service during the tax year as section 179 property. If this election is made, the term “section 179 property” will include any qualified real property that is:
• Any of the following improvements to nonresidential real property placed in service after the date the non-residential real property was first placed in service.
2. Heating, ventilation, and air-conditioning property
Business Income Limit
The total cost you can deduct each year after you apply the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year. Generally, you are considered to actively conduct a trade or business if you meaningfully participate in the management or operations of the trade or business.
the problem I came across was no matter how I entered the info, on a test basis, I could not get the 179 deduction. you may need to talk to support.
irc sec 179 (e)
e)Qualified real property
For purposes of this section, the term “qualified real property” means—
(1)any qualified improvement property described in section 168(e)(6), and
(2)any of the following improvements to nonresidential real property placed in service after the date such property was first placed in service:
(B)Heating, ventilation, and air-conditioning property.
(C)Fire protection and alarm systems.
SEC179 only applies to *NON* residential rental property. If this is residential rental property then you can't use SEC179 at all. You "may" be able to use instead the Special Depreciation Allowance. But not on a newly installed central HVAC system. Such a system is considered to be "a permanent and physical part of" the property. Therefore it's classified as residential rental real estate and depreciated over 27.5 years.
Others can argue the matter all they want and it really doesn't bother me. My own sister has already been "called on the carpet" for "this" "exact" sitiuation 10-12 years ago, so she's been there, done that, got the T-Shirt. So if you want a T-shirt too, you can probably get one a few years after you file having classified it as anything other than residential rental real estate. It's one damn expensive T-shirt too!
I thought there were updates to this in the last year or two. For a Residential Rental (no 179). Maybe the replacement of an old HVAC system with a new one brings different tax treatment than the original installation of a HVAC unit in a new rental?
Turbotax seems to be classifying a replacement for me as appliance/furniture, clarification or general opinion would be awesome..
You need to classify the HVAC as an Improvement to the actual Residential Rental Property/Real Estate. Do not call it an appliance (unless it is a portable or removable unit, such as something similar to a window air conditioner).