Appliance Depreciation

[mgc6288]

This is some fun stuff...well not really.  I purchased a property late last year and the losses are already slightly beyond the $25k allowed.  I have three appliances that I purchased last Nov/Dec and knee jerking if best to simply take the 179 and let it carry over for next year given the $25k limitation.  This gets the depreciation out of the way.  

The second argument is over the next 5 years in hopes that I have higher income down the road.  If I choose this route, TT demands 200DB MQ but there is a book value year end whereas the straight line is zero dollars on the final year.  One would guess the SL is the better route in using all the depreciation.

The only way I can see able to select SL is by intangible - other but does this screw with the IRS?  

Then I wondered if the appliance dies before the final depreciation year then I may lose the remaining depreciation, so maybe best to 179 anyway?

[PatriciaV · Accepted solution]

Was the property available to be rented in 2023? If not, depreciation for the new assets would not begin until you list the property for rent (in service date). The cost of repairs and improvements until that date would increase your basis in the property but not be eligible for depreciation nor expense deductions. To qualify as a rental property (compared to an investment), the residence must have been listed as available to be rented (even if there was no tenant).

In general, spreading the cost of an asset over several years (depreciating) is a good choice if you expect to have income during those years. But if you have enough income in the year the asset is purchased, expensing the full asset cost (if allowed) will reduce the taxable income for that year.

[mgc6288]

Very good point.  For the Nov/Dec purchases, they technically were not placed in service until January 2024 when the advertising started.  So I guess these appliances then I need to entirely remove from the TT 2023 and await next year as TT requires a starting date prior to 12/31/2023. 

@PatriciaV 

[PatriciaV]

Yes, you are correct. Add the assets in the year they are placed in service.