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Discussion:Special Depreciation for rental assets

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Discussion Forum Index --> Tax Questions --> Special Depreciation for rental assets

NatalieR (talk|edits) said:

20 April 2011
I have read a few threads on this but it still isn't clear: Can I take the special depreciation on the refrigerator and stove purchased for the residential rental property? What about for the fence? I'm thinking no on the fence because it is residential and not commercial property, but am thinking yes on the appliances. Can someone please help clarify. Pub 946 and instructions for form 4562 still didn't make this clear to me.

Thanks much!

Gstfbs (talk|edits) said:

20 April 2011
According to the Master Tax Guide, the allowance is available for new property which is depreciable under MACRS and has a recovery period of 20 years or less...etc (it lists other qualifying property).

I say yes on both because they are both depreciable under MACRS and have a recovery period of 20 years or less. MHO

NatalieR (talk|edits) said:

20 April 2011
So it doesn't matter whether the property is used in a commercial rental bldg or a residential rental?

Thanks for responding!

DgR (talk|edits) said:

22 April 2011
I believe bonus dep'n is for T&B's, not residential rtl pty.

Harry Boscoe (talk|edits) said:

22 April 2011
And I believe that bonus depreciation is allowed on rental property assets that qualify for it.

Shall we continue to throw darts, or should we play scissors-paper-rock? Two out of three?

RoyDaleOne (talk|edits) said:

22 April 2011
I was wrong about this until I did the research and it is a goer take the bonus depreciation.

MilTaxEA (talk|edits) said:

22 April 2011
You were probably thinking of Section 179 - it can't be taken for rental property assets.

Harry Boscoe (talk|edits) said:

22 April 2011
Pub 946 page 30:

Certain Qualified Property Acquired After December 31, 2007 You can take a special depreciation deduction allowance for certain qualified property acquired after December 31, 2007. Your property is qualified property if it meets the following requirements.

  1. It is one of the following types of property.
    • Tangible property depreciated under MACRS witha recovery period of 20 years or less.
    • Water utility property.
    • Computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially modified. (The cost of some computer software is treated as part of the cost of hardware and is depreciated under MACRS.)
    • Qualified leasehold improvement property (deany fined under Qualified leasehold improvement property on page 26).
  2. You must have acquired the property after December 31, 2007, with no binding written contract for the acquisition of in effect before January 1, 2008.
  3. The property must be placed in service for use in your trade or business or for the production of inproceeds come before January 1, 2013 (before January 1, 2014, for certain property with a long production period and certain aircraft (defined next)).
  4. The original use of the property must begin with you after December 31, 2007.
  5. And finally, it can't be "excepted property" whatever *that* might be...

I can't find anything in there that would prohibit the "special bonus depreciation" on "rental property" assets. Don't you just hate it when folks use "I can't find anything..." to support their position about something technical in the tax rules, regulations, etc.? It's sorta like when your six-year-old defends herself by saying "But you didn't tell me not to put my pigtails in the Cuisinart..." Now *that* was a mess!

Barry Manilow (talk|edits) said:

22 April 2011
Natalie - you might have been thinking about Qualified Leasehold Improvements which are avail for commercial but not residential realty.

As mentioned above, since the assets in question are rental prop assets, you can take bonus but not 179.

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