Almost done with my Rental Prop Taxes

[Harry Campbell]

Thanks to this forum I found NOLO's Landlord deduction guide and it has been a god send. It's answered pretty much every question I had and the examples are super helpful too. Great recommendation.

Anyways, I'm just finishing up my taxes and I have a few questions. I converted my primary residence to rental prop in 7/2013(rented on 8/1/13) and I want to use segmented depreciation to accelerate the depreciation of my personal property.

1. First, on a 280k condo does it seem reasonable to take 5k in personal property deductions(washer/dryer, appliances, carpet, etc) for segmentation?

2. I'm also a little confused still about the depreciation method. In the book, it talked about 150% method, 200% method, etc. When can these be used and this is separate from bonus depreciation right? For ex, I know that I have to depreciate my bldg value on a 27.5 year schedule, no way to accelerate that. But what about for personal prop that I claim as segmented depreciation. Obviously I want to frontload these deductions as much as possible right so I should use 200% method? Or do I have to use straight line depreciation on segmented stuff?

3. Similar to 2, I had to replace the A/C last year(October) and that cost me 3k. I believe I can take 50% bonus depreciation but then is my only option to do straight line depreciation(mid quarter convention right?) over 5 years? Or can I do something accelerated here?

I'm still learning all the depreciation terminology so feel free to correct any of it. The depreciation method is straight line, 150%, etc right? The convention is mid quarter, half year, etc?

[Dave Toelkes]

If you use one of the popular tax preparation software packages, such as TurboTax, the software calculates the depreciation for you using the correct method.

Also, since you did a conversion from personal use to rental use, you do need to know the value of your property on the day you did the conversion. According to the IRS rules, you have to re-set yoru tax basis to the LOWER of your purchase price, or, the fair market value of the property on the date of the conversion. Time to meet with a professional appraiser and have a retrospective appraisal done for the date you converted to rental.

Just to clarify the depreciation schedule for air conditioning. The five year depreciation schedule is for the window air conditioner that is installed as a "free standing" unit. If you have a central system that is an integral component of the structure, then the system is depreciated on a 27.5 year schedule, just as you would depreciate any new structural component of the dwelling structure (e.g., a new roof).