Bonus depreciation questions

Feb 10, 2014 2 Replies
C

I have a small 3-unit apartment building I rent out.



Last summer I replaced the driveway for this building.



Can I elect to take the 50% bonus depreciation for the driveway?



I also had to replace a refrigerator in this building. Can I elect 50% bonus depreciation for this as well?



Thanks.


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R

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536 you can take bonus depreciation on any item with a class life of 20 years or less, and that is not used predominently outside the US. I think driveway has a class life of 15 years and fridge 5 years. So I think the answers are yes and yes. But remember that if your modified AGI is above 150k you don't get to take any loss, so in think case the use of bonus depreciation makes no difference.

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C

Except that 1) my spouse legitimately qualifies for Real Estate Professional status, and we meet the active and material participation requirements; and 2) my rentals actually turn a profit even after depreciation.

I'm in some sort of weird AMT/PEP hell that puts my incremental rate at close to 40%, so believe me it makes a big difference.

Thanks for your response.

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