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Updated almost 3 years ago,

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1
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Will Wallander
  • Pittsburgh, PA
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Appliances purchased prior to placing my rental into service

Will Wallander
  • Pittsburgh, PA
Posted

I purchased a foreclosed property on August 7, 2018.  I rehabbed the property and placed it into service on September 30, 2018.  My tenant signed her lease on October 11, 2018 and moved into the unit in early November.

I have read that all repairs and expenses that can normally be deducted must be depreciated with the building if they are incurred before the unit is placed in service.

As part of the rehab I purchased new appliances.  Prior to September 30th (the "in service date"), I purchased a new oven/stove, microwave, refrigerator and washing machine.

After September 30th (the "in service date"), I purchased a new hot water heater and dryer (I thought I had adequately repaired the hot water tank and dryer, but I had to replace them for the tenant).

Questions:

(1) May I use the de minimis safe harbor or bonus depreciation for the appliances purchased before the in service date?  Or must these appliances be depreciated along with the rest of the building (i.e. over 27.5 years)?

(2) Based on my interpretation, I may use the de minimis safe harbor for the appliances purchased after the in service date.  Am I correct?

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