Catchment on rental property

[Catherine]

Client owns a house in Hawaii that is rented out through various sources.  This house is built on solidified lava, and ALL water leaving the house has to be caught and pumped away by truck.  In 2017, she needed to put in a new catchment system to deal with all household water.  Considering what it needs to do and how remote the property is, it was remarkably inexpensive.

What depreciation do I use?  I can find farm info (this isn't a farm), rental property info (not really part of the house), land info (maybe the closest but I dunno - and how does solid rock qualify as "land" except I guess it does), appliances (nope!) - nothing really seems to fit what this is and what it does for the property.  Section 179 won't help as there was no profit for 2017.  Help, please!

[Lion EA]

I know a septic system would be 27.5 depreciation for a residential rental if considered part of the structure, but 15 years if considered a land improvement. Pub 527 seems to say 27.5.

Have you used your NATP free research question yet this year?

[jklcpa]

^ what Lion said.

[Catherine]

NATP it is, then.  Thanks!

[Max W]

From the IRS cost segregation example, it is Sec 1250 property - 27.5yrs.

Site Work

Site work includes curbing, paving, general site improvements, fencing, landscaping, roads, sewers, sidewalks, site drainage and all other site improvements not directly related to the building.  For sanitary sewers, see Site Utilities.

1250

00.3 Land Improvements –

https://www.irs.gov/businesses/field-directive-on-the-planning-and-examination-of-cost-segregation-issues-in-the-retail-industry

[Abby Normal]

13 hours ago, Max W said:

From the IRS cost segregation example, it is Sec 1250 property - 27.5yrs.

Site Work

Site work includes curbing, paving, general site improvements, fencing, landscaping, roads, sewers, sidewalks, site drainage and all other site improvements not directly related to the building.  For sanitary sewers, see Site Utilities.

1250

00.3 Land Improvements –

https://www.irs.gov/businesses/field-directive-on-the-planning-and-examination-of-cost-segregation-issues-in-the-retail-industry

You cut off the right side where it says 15 years.

Site Work

Site work includes curbing, paving, general site improvements, fencing, landscaping, roads, sewers, sidewalks, site drainage and all other site improvements not directly related to the building.  For sanitary sewers, see Site Utilities.

1250

00.3 Land Improvements – 15 Years

[Lee B]

If it was moveable on wheels then it would be 7 year property. 

[Max W]

5 hours ago, Abby Normal said:

You cut off the right side where it says 15 years.

Site Work

Site work includes curbing, paving, general site improvements, fencing, landscaping, roads, sewers, sidewalks, site drainage and all other site improvements not directly related to the building.  For sanitary sewers, see Site Utilities.

1250

00.3 Land Improvements – 15 Years

Abby, thanks for picking that up. Apparently my browser cut off the "15 years"