Depreciating HVAC Boiler

[Derrick Lumsden]

Hello All, I am wondering if anyone would share their opinion or even expertise on depreciation vs repair. I just had an old HVAC boiler replaced for $3900 including labor. I know depreciation would cost out the expense over a number of years. Is there a standard depreciation time frame for this kind of capital improvement? Are there options? Is the depreciation basis the cost of goods, or cost of goods plus installation? Finally, will I have a choice between repair or depreciation? Given my financial position, I suspect it will be most valuable to me to depreciate over 3-7 years rather than through repair. (Don’t worry, I do have a CPA, and I will talk to him about all this. I just searched the forum and couldn’t find a depreciation post that really answered these questions—maybe I am search incompetent—so I thought it could make a good thread.)

[Eamonn McElroy]

@Derrick Lumsden "Is the depreciation basis the cost of goods, or cost of goods plus installation?"

Cost of boiler, sales tax, plus all costs associated with getting it ready for operation.

"Finally, will I have a choice between repair or depreciation?"

You bought a brand new boiler to replace an old one?  Curious how you're going to argue this is a repair?

Generally the boiler would be depreciated straight-line over 27.5 years (assuming residential RE) using mid-month convention, but there are options for expensing.  This may even qualify for a tax credit depending on the answers to a Q&A conversation.

Your CPA knows your facts, circumstances, and goals and will be best equipped to help you with this.