Tax Law (Questions About Taxes)/depreciation

Advertisement


Question
QUESTION: hi john, my LLC owns residential rental real estate which i bought this year.  i understand i can deprecate real estate property. however, the existing stove, refrigerator, furnace, water heater still works.

can i deprecate existing furnace/water heater and appliance that i acquire as part of the home purchase? thanks

ANSWER: Rob,

Thanks for your question.

Yes, you can depreciate those items if they are being used in the rental. The furnace would normally be included as a part of the housing unit. Don't forget that you cannot depreciate land, so the land value must be subtracted from the cost basis to determine the depreciable amount of the housing unit.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: Thanks john, so you are saying furnace should be part of housing unit. Does this mean I need to add up housing cost basis and price of furnace? For example, the depreciable amount is $67k. So if price of furnace is $1500 then, my depreciable value that i should enter is $67k+$1500=$68,500?
If yes, how do I determine the value of the furnace if it was already there?

Answer
You don't need to know the value of the furnace. It's part of the house and depreciated with it. Only if you install a new unit would it be depreciated separately. If the depreciable amount of the house is w$67k, that includes the furnace.

John Stancil, CPA

Tax Law (Questions About Taxes)

All Answers


Answers by Expert:


Ask Experts

Volunteer


John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

©2016 About.com. All rights reserved.