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Level 2
posted Apr 13, 2023 2:15:44 PM

Bonus Depreciation in Non-Conforming State

I have a short term rental that I did a cost segregation on and am taking accelerated bonus depreciation.  I live in OR but my rental is in AZ.  My issue is AZ is a non-conforming (does not recognize the bonus).  If I take the bonus depreciation AZ it basically saying the entire bonus depreciation is an income addback and then they calculate the AZ depreciation as a subtraction and it wants me to pay tax on the difference.  Does this sound right?  Is there an easy way to fix this?

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1 Replies
Expert Alumni
Apr 14, 2023 11:04:05 AM

That is how Arizona treats bonus depreciation.  Now you'll also have two different depreciation schedules going forward.  There is no way to fix this - short of not having a rental home in Arizona.

 

@osme02