OBBBA depreciation for Apartment Remodel

[kcirly]

I own an 8 unit apartment building. in 2025 I remodeled one unit. the project included new kitchen cabinets, recessed lighting, a new countertop, sink, disposal, refrigerator, cooktop and some electrical work. My building manager reported out the cost of the project on my monthly and year end income and expense statements under the heading of capital improvements. In preparing my 2025 taxes I have learned about new depreciation rules included in iRS section 179 and OBBBA bill. I use Turbotax to complete my tax return but TurboTax treats these costs as 27.5 year capital improvements. How can I get the program to depreciate them immediately at 100% for 2025 in line with the OBBBA?

[DaveF1006]

Yes, some of these do qualify for the 100% bonus depreciation while others do not. it all depends if the changes were structural or not. Any structural and permanent part of the building are not eligible for bonus depreciation and must be depreciated over 27.5 years. However, some 5-7 year property can is eligible for the 100% bonus deprecation. Here are some examples that is immediately eligible for this  depreciation and what can't.

These are not structural components of the building thus are eligible for 100% bonus depreciation.

• Refrigerator 
• Cooktop
• Garbage disposal
• Some electrical work (if it is dedicated equipment wiring, not building wiring)
• Possibly recessed lighting fixtures (if they qualify as equipment, not building systems) If they do become part of the structure of the building and are not easily removed, then they are not eligible for the deduction.

These are structural components and are not eligible for ‌bonus depreciation and are subject to the 27.5 depreciation convention.

• Kitchen cabinets 
• Countertops
• Sink
• General building electrical wiring
• Anything considered part of the building’s “real property”

For those items that i mention that are eligible, here is how to report these.

1. Open your rental property in TurboTax. 
2. Go to Assets/Depreciation.
3. Choose Add an asset.
4. Select Appliances, furniture, or equipment (NOT “Residential Real Estate”).
5. Enter each qualifying item separately:

• Refrigerator 
• Cooktop
• Garbage disposal
• Eligible electrical components
• When TurboTax asks whether the item qualifies for 100% bonus depreciation, answer Yes.
• TurboTax will then expense the entire cost in 2025.

 

[kcirly]

Thank you for your response. I ftried to follow your directions as written.  I used the refrigerator as a test.  The process generated no deduction of any sort. I proceeded in this order:

I checked "office furniture, fixtures, appliances"

Entered Cost $933 purchased 12/02/2025

I checked "I Purchased asset.", 100% business use, placed in use 12/20/2025

Under "How do you want to deduct this asset"  I checked "no section 179" and take "Maximum SDA available"

The program showed me the "asset summary" of $993

I checked under "Details" which showed 7.0 years to depreciate / MACRS  MQ / depreciation method 200DB

Under "Special Deductions". Section 179 $0 / Under SDA $993 

On the Asset List it showed $993 in the special depreciation column. "0" in the depreciation column

However the program showed no change in my federal refund window and I could find no other evidence of the deduction being applied.

[PatriciaV]

The amount shown in the Federal Refund window is an estimate, not a final number until you actually get ready to file your return. Many factors contribute to the calculation of the refund shown.

Does your Rental Property show a profit for the year? You might review the Schedule E worksheet for this property to see how depreciation was reported and confirm the expense reduced the income for that property. An overall loss for the property may have been suspended as a carryover, as rental properties are subject to the passive loss rules.

See IRS Topic 425 - Passive Activities – Losses and Credits