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Rental Property. 100% Bonus Depreciation?
Old 09-24-2020, 12:10 PM   #1
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Rental Property. 100% Bonus Depreciation?

Sorry. Will try once more. Maybe, my previous "Title", was misleading.

OK, tax experts and landlords.

Rental house. Remodel. Replace Kitchen cabinets, Install hardwood floor 1st floor, replace carpets 2nd floor. Remodel both bathrooms, vanities, shower/tub stalls.

Any of these improvements, qualify for the 100% "Bonus" depreciation.

Did, some research. Seems some people say yes, others say no.

What's the real answer. Thanks in advance.
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Old 09-24-2020, 12:34 PM   #2
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I understood your question, but never used accelerated depreciation on my rentals.
In fact I desire slow depreciation, as slow as I can get it.
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Old 09-24-2020, 01:20 PM   #3
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Same here. I saw your question, but haven't done a thorough investigation since I can't think of a good reason to do this for my rental property.

Here's a nolo article on how TCJA affects landlords: https://www.nolo.com/legal-encyclope...landlords.html

Quote:
Bonus depreciation may not be used for real property, except for real property improvements such as landscaping or grading, and other components that have a depreciation period of 20 years or less. Thus, landlords may not use it to deduct the cost of their rental buildings or major building components.
The carpets probably have a useful life less than 20 years, so I'd guess it's a yes for those. The other items you list are probably on the regular 27.5 yr schedule for depreciation, so no. As I said, have not done any research other than reading the nolo article, so I could be wrong.
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Old 09-24-2020, 01:29 PM   #4
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I also never used or heard of 100% "Bonus" depreciation. Usually major repairs are deductible from your rental income.
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Old 09-24-2020, 02:05 PM   #5
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Originally Posted by wolf View Post
Rental house. Remodel. Replace Kitchen cabinets, Install hardwood floor 1st floor, replace carpets 2nd floor. Remodel both bathrooms, vanities, shower/tub stalls.

Any of these improvements, qualify for the 100% "Bonus" depreciation.

Did, some research. Seems some people say yes, others say no.

What's the real answer. Thanks in advance.
It seems to depend on whether you are treating it as a business or as a passive income activity. That may be why you get different answers. Sometimes the answer may depend on the accounting methodology you've selected. For the 'right' answer, ask your accountant. They get paid to be correct.
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Old 09-24-2020, 02:54 PM   #6
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I don't think so, unless you replaced appliances as a part of the kitchen remodeling.

Quote:
Qualified business property includes:
  • Property that has a useful life of 20 years or less. This includes vehicles, equipment, furniture and fixtures, and machinery. It doesnít include land or buildings.
  • Qualified improvement property. This includes improvements made to the interior of ďnonresidential real propertyĒ (also known as a commercial building), as long as the improvement is made after the building is open for business.
  • Computer software.
  • Some listed property. Listed property includes property that tends to be used for both business and personal use, such as vehicles and cameras. To qualify for bonus depreciation, the asset has to be used for business at least 50% of the time.
  • Costs of qualified film or television productions and qualified live theatrical productions.
https://bench.co/blog/tax-tips/bonus-depreciation/
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Old 09-24-2020, 07:38 PM   #7
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Depreciation is always 27.5 years as far as I was aware.
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Old 09-25-2020, 08:42 AM   #8
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Generally speaking, things fixed to the building are considered improvements, so you should review qualified improvement section of IRC section 168(k) to see if you qualify. Anything that's not attached, or clearly machines (i.e., fridge, microwave, dishwasher) could qualify. However, If you are limited by passive loss, then you may not benefit much from the bonus depreciation anyway. You may also consider if you could qualify under section 199A, since depreciation is a timing difference (you total deduction over the years is the same), while section 199A is a permanent benefit if you have business taxable income.
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Old 09-25-2020, 11:00 AM   #9
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Originally Posted by Sunset View Post
I understood your question, but never used accelerated depreciation on my rentals.
In fact I desire slow depreciation, as slow as I can get it.
Same here. Don't play the depreciation game, just the buy and hold as a pass through and collect rents.
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Old 09-27-2020, 05:34 PM   #10
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Well I questioned why my account didnít depreciate a $3500 new ac unit I had installed in a rental. He did, I was looking in the wrong place. He said it was fully deductible in the year paid due to the bonus depreciation rules and didnít have to be spread out as was the case before.
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Old 09-28-2020, 11:02 AM   #11
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Originally Posted by Joylush View Post
Well I questioned why my account didnít depreciate a $3500 new ac unit I had installed in a rental. He did, I was looking in the wrong place. He said it was fully deductible in the year paid due to the bonus depreciation rules and didnít have to be spread out as was the case before.
Interesting. This is the "gray", area I'm asking about. AC, unit. Attached.
Yet, got the "100%" bonus depreciation. Sometimes, depends on how "aggressive" your account his.

Thanks, for the posts.
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