Rental Depreciation

Forum|Forum|5 years ago
March 3, 2021
1 reply
13 views

I purchased a garbage disposal, dishwasher and HVAC unit (A/C) for the rental. Are these correct information to enter for each appliance for depreciation?

Dishwasher

Asset Type: Tools and Machines

Depreciation Method: Double Decline Balance (use Section 179 if I want to deduct everything for the taxyear)

Life: 7

Depreciation Convention: Bought July 12, 2020 (what do I use, 1QT?)

HVAC

Asset Type: Tools and Machines

Depreciation Method: MACRS Straightline

Life: 27.5

Depreciation Convention: Bought 6/10 (not sure what to use here)

I also bought a garbage disposal for $122 for a rental. Do I need to depreciate this item or could I just expense this under 'Supplies'?

Thanks for your forthcoming response.

ColeenD3

Level 15

Yes, you can expense the garbage disposal, but if you choose the safe harbor election (described later) you can include both

the dishwasher and the garbage disposal.

When you started the depreciation section, you should have chosen assets. Next, apart from the building itself, you would choose:

-Improvements to rental buildings Learn More

-Appliances

-Furniture

The dishwasher is an appliance. You have the choice of depreciation or the safe harbor (expensing) which begins on the screen:

Did you buy any items for any business, rental property and/or farm that cost $2,500 or less in 2020?

Let's see if you can deduct these items as expenses.

If you choose to depreciate, answer no and continue to the screen:

Rental Real Estate Property

Land Improvements

Real Estate Property

Rental property appliances, carpet, furnishings

You will arrive at the asset summary screen which properly gives a 5 year useful life. Renters can be hard on appliances so the property is give a shorter life.

The HVAC is considered part of the house (rental real estate) and, yes, has a 27.5 year life.

harry7

Level 2

In August 2020, I replaced a tub/shower with a shower because my tenant has disabilities at a cost of $8900 to provide a safer bathing option for him. TT won't let me take a section 179 for this, why?

Harry

JeffreyR77

Level 10

There are a couple of reasons why TurboTax may not be allowing the Section 179 deduction.

First, does your rental property have $8,900 of net income to absorb the accelerated depreciation of the shower deduction? A Section 179 deduction must have net income to offset the deduction.

Second, have you formally elected the safe harbor to have your rental real estate to be treated as a trade or business for the purposes of Section 199a? To be eligible to do this you must meet the following requirements:

Separate books and records are maintained to reflect income and expenses for each rental real estate enterprise.
For rental real estate enterprises that have been in existence less than four years, 250 or more hours of rental services are performed per year. For other rental real estate enterprises, 250 or more hours of rental services are performed in at least three of the past five years.
The taxpayer maintains contemporaneous records, including time reports, logs, or similar documents, regarding the following: hours of all services performed; description of all services performed; dates on which such services were performed; and who performed the services.
The taxpayer attaches a statement to the return filed for the tax year(s) the safe harbor is relied upon (tax return must be printed and mailed in)