Building Structure vs Building Systems

[Kyle Kyzer]

Hi All,

I got recently received this email from my CPA:

"The new [IRS] regulations break apart building property into a 'building structure' and its 'building systems' for the sake of the improvement rules and say that any improvement to a building system is an improvement to the building as a whole. The building is considered a single 'unit of property' when capitalizing the improvement."

She then went on to explain what systems need to have a value assigned to them: 

-HVAC systems ( motors, compressors, boilers, furnace, chillers, pipes, ducts, radiators) 

-Plumbing systems (including pipes, drains, valves, sinks, bathtubs, toilets, water and sanitary sewer collection equipment, and site utility equipment used to distribute water and waste to and from the property line and between buildings and other permanent structures)

-Electrical systems (including wiring, outlets, junction boxes, lighting fixtures and associated connectors, and site utility equipment used to distribute electricity from the property line to and between buildings and other permanent structures)

-Gas distribution systems (including associated pipes and equipment used to distribute gas to and from the property line and between buildings or permanent structures)...

-etc.

Now my question is have you all done this yet, and if so, did you use some kind of system to determine the value of each of these systems--say 15% of acquisition price+repair value for hvac, 10% for plumbing, 70% for building structure, etc.?  I just find this a very complicated change for taxes!  For example, if the HVAC is now one system, what happens with the cost of replacing the outside air conditioner unit but not the entire system (same furnace, blower, vents, etc.)?  Is that just a $3500 repair now that I don't have to depreciate over several years?  Thanks for yall's help!

-Kyle Kyzer