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New Member

Depreciation of new septic system against income from rental of part of my house

I rent out part of my house and installed a new septic system in 2019 for $39,000. 

1.) This would be an improvement to my property, so I should depreciate this, right? 

2.) I live in the main house.  Do I need to use percent calculation (percent of square footage I live in compared to percent studio is) of total amount of system since it is used by both rental and main house? 

3.) Can I use the new Section 179 Deduction and deduct in one year?

4.) Is there a way to deduct over 3 years?  Since my state will only allow $25,000 in a Section 179 Deduction.

Thanks for the help

3 Replies
Level 15

Depreciation of new septic system against income from rental of part of my house

 
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Level 15

Depreciation of new septic system against income from rental of part of my house

it doesn't qualify for 179 for federal purposes 

from section 179

(d)Definitions and special rules
(1)Section 179 property

For purposes of this section, the term “section 179 property” means property—
(A)which is—
(i)tangible property (to which section 168 applies), or
(ii)computer software (as defined in section 197(e)(3)(B)) which is described in section 197(e)(3)(A)(i) and to which section 167 applies,
(B)which is—
(i)section 1245 property (as defined in section 1245(a)(3)), or
(ii)at the election of the taxpayer, qualified real property (as defined in subsection (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), 

 

from 168(e)(6)

(6)Qualified improvement property

In general

The term "qualified improvement property ” means any improvement to an interior portion of a building which is nonresidential real property  if such improvement is placed in service after the date such building was first placed in service.

 

the life 27.5 years

 

 

a portion of your house is being used as rental.  have you been depreciating it?  if not you were suppose to 

and this needs correction because if you ever sell the property you will be required under the tax laws to report as income the depreciation you should have taken but didn't

 

 

the most logical way to determine the % to depreciate is to compute the rental are in relation to the total area of the house. 

 

 

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New Member

Depreciation of new septic system against income from rental of part of my house

I use 29% studio and 71% main house for utilities (elec. & water).  Will I depreciate the septic $39,000 x .29= 11,310 using this number $ 11,310?