Bonus depreciation for Rentals?

[mactoolsix]

We have always taken bonus depreciation when the T/P is in a profitable year. During a recent round table with several other tax practices, we found that many feel bonus depreciation is not allowed for rental properties.

I have studied Pub 946, and though it lists several "special zones" where rental property is qualified, it does not list rental property as not qualified. Maybe it is using the "business" reference as an exclusion for rental property?

Checking IRC Section 168(k)(2) does not even reference "business" property, and it also does not specifically exclude rentals.

In general the term “qualified property” applies to property which has a recovery period of 20 years or less. Thus personal property related to rentals should qualify.

Do you normally take bonus depreciation for rentals?

Thanks,
Mike

[Gretel]

Rental property does qualify. I have a client (I am not doing his tax return) who build several apartment buildings and then his CPA did a cost segregation study to max his bonus depreciation.

[rgtaxservice]

In general the term “qualified property” applies to property which has a recovery period of 20 years or less. Thus personal property related to rentals should qualify.

How could a rental property qualify? The recovery period is 27.5 years for residential and 39 years for commericial property?

[S T]

Personal Property

Personal property, would it qualify, such as furniture/fixtures, other items that would be less than the 20 year period?? Maybe water heaters, appliances, carpet, blinds, etc?

Sandy

[Gary2]

Perhaps people are confusing the prohibition against using the 179 deduction for rentals with the bonus depreciation rules.

[mactoolsix]

Clarification

rgtaxservice - As Sandy pointed out (and in the original post) "personal property related to rentals should qualify."

Gary2 - This has been discussed with the round table group, and there didn't seem to be any confusion on not taking Section 179 for rentals.

Thanks,
Mike

[AJsTax]

Close

Personal property, would it qualify, such as furniture/fixtures, other items that would be less than the 20 year period?? Maybe water heaters, appliances, carpet, blinds, etc?

Sandy

All of those would qualify as personal property used in a rental except the water heater. Hot water tanks, furnaces, etc are considered part of the building once installed. All the other items are short term depreciation and eligible.

[taxitc]

Fence

I am reading a "fence" as MACRS 15 year property on a residential property (duplex).
I am reading on tab 9-16 in taxbook--special depreciation, 1) qualified property is ONE of the following: ...MACRS with recovery period of 20 or less then 2) nonresidential real AND residential rental property. I think the fence qualifies. The only question I see is::::50% or 100% bonus. Fence was construted on 10-19-2010. Comments???