Reporting 179 deduction on DC form D-30

[JohnVeilleux]

Is a federal 179 deduction for rental property improvement reported on Schedule G of the DC form D-30?

[ReneV4]

No. The Federal Section 179 expensing rules generally do not apply to rental property because it is considered a passive investment, rather than an active trade or business.

The $25,000 deduction cap generally applies to equipment used in an active trade or business, not residential rental property.

If you claim Section 179 deductions on your Federal return for your rental property, you will usually be required to make an adjustment to add back that amount on your DC return.

As an alternative, for items that do not qualify for Section 179, rental property owners can consider the De Minimis Safe Harbor, which allows them to immediately deduct, or expense, items that cost $2,500 or less per item. You may also qualify for the Safe Harbor for Small Taxpayers for larger building repairs or improvements.

[JohnVeilleux]

I understand that rental property is not automatically considered an active business but I am actively participating in the business and believe 179 applies.

[ReneV4]

It's understandable that you want to ensure that you get all of the deductions to which you are entitled. However, actively participating in the business does not change the rule. Attached is the 2025 DC Form D-30 Instructions. Note that on page 2, it states, "Certain tax provisions from the federal One Big Beautiful Bill Act (OBBBA) will not apply to District corporation income franchise tax such as immediate expensing of domestic research and experimental expenditures, additional depreciation of qualified production property, and changes to the limitation on business interest deduction."

[lasq90]

Hi! So I am having trouble with DC "Adjustments to Depreciation" for residential rental property too. Turbotax is reducing my DC depreciation reduction by $222 due to "IRC168 additional depreciation and/or extra IRC179 expenses claimed on federal return." I've read DC regulations and I do believe this should not apply to me, as I have never claimed bonus depreciation or accelerated depreciation. The total depreciation claimed for the year is $11,177; way below the $25k/year cap (if that was the issue). I've been troubleshooting and when I reduce my total depreciation for the year, such DC correction disappears. But it still makes no sense for me to be $222 above any "threshold". This is my second year depreciating. For 2024, total depreciation claimed was $8,848 (for 9.5 months / mid-month convention placed in service on March 1st, 2024). No capital improvements have been made either.

Do you have any idea what's going on? Many thanks!

[AmyC]

Follow these steps:

1. Look at your Federal Form 4562 (Depreciation and Amortization).
2. Check Line 14 (Special depreciation allowance) or Part I (Section 179). If there is a number there, that is your culprit.
3. Check your Depreciation Asset Report. Look for any asset that isn't the "Residential Building" (27.5-year). If you see an asset with a "Special Allowance" or "179" column, that $222 is the adjustment to bring that asset back to DC's "slow" rules.

Here's why:

• Federal may have applied a 60% or 40% "Bonus" depreciation to 5-year and 15-year assets automatically unless you specifically checked a box to "Elect Out."
• If you bought a $500 lawnmower or a $1,000 fridge, TurboTax might have applied Bonus Depreciation to it on the federal side.
• DC rejects that bonus. The $222 is likely the difference between the "bonus" you got on federal and the "slow" depreciation DC requires.