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Depreciation on California From 3885A

Hello!  I have a short term rental and I sect 179 various depreciable items - pool equipment, roof, and HVAC.  On the California form, it is depreciating this over a 39 year life.  (My STR is a considered commercial and has a 39 year life).  However, I believe these items should be depreciated over a shorter period of time.  I can't figure out how to update.  Can you please let me know?  Thank you!

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1 Reply
MonikaK1
Employee Tax Expert

Depreciation on California From 3885A

If your 179 deductions exceeded the limit for California ($25,000), you may have seen that TurboTax applied the recovery period for rental real property instead. You may want to go back into the Federal section and set up individual assets for depreciation that don't have to use the 39-year recovery period. 

 

The tax law has defined a specific class life for each type of asset. Real Property is 39-year property, office furniture is 7-year property and autos and trucks are 5-year property. See Publication 946, How to Depreciate Property.

 

California law has not always conformed to federal law with regard to depreciation methods, special credits, or accelerated write‑offs. Consequently, the recovery periods and the basis on which the depreciation is calculated may be different from the amounts used for federal purposes. See the instructions for Form FTB 3885A for more information.

 

California law does not conform to the federal law for: 

  • IRC Section 168(k) relating to the depreciation deduction for certain assets. 
  • The enhanced IRC Section 179 expensing election. 
  • The expanded definition of IRC Section 179 property for certain depreciable tangible personal property related to furnishing lodging and for qualified real property for improvements to nonresidential real property

California law does not conform to the federal limitation amounts under IRC Section 179(b)(1) and (2). For California purposes, the maximum IRC Section 179 expense deduction allowed is $25,000. 

 

See this TurboTax tips article for more information on depreciation and Section 179 expenses.

 

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