Rental Expense

[michaelmars]

sometimes a family home can be simpler if you want it to be simple, forget the hvac type stuff and just add up the carpeting, appliances etc that were part of the original building cost. can save you some coins. a full study might bring more savings but as you said, it might be too costly.

[Lee B]

Nope, that was outlawed way back in 1981 by the change to ACRS. You can no longer use component depreciation like that--when a structural component of a building is removed, it is not treated as a disposition until the entire building is disposed of. There is no adjustment to basis, no gain/loss, no recovery of cost allocated to the removed component. The building as a whole continues on the same depreciation schedule, even though a new schedule is started for the replacement component.

I went to a Tax Update seminar last Monday and the New Capitalization and Repair Regs change this effective Jan 1, 2014.

Also a partial disposition election can be made back as far as years beginning on or after Jan 1, 2012 via amendment or accounting method change (Prop Reg 1.168(i)-(d)(2)(ii) and (Prop Reg 1.168(i)-8(d)(2)(iv) See IRS Notice 2012-73

I not going try to spell out all the changes but this is going to affect everyone with depreciable tangible property.

Any change to comply with new regulations will generally be a change in accounting method to be recognized prospectively.