Depreciation category

[robert-a]

An Air B&B was created after a purchase of a single family home. About one hundred purchases of "furnishings" were made by the owners of the Air B&B. Although I have done taxes for thirty years with ProSeries Professional, and depreciated many items, I have not depreciated used furnishings as couches, etc. About ten items were over $500 and the rest were under $500. What 'category' for depreciation should be used and what term of years for depreciation? Is the 'over $500' applicable, or are none, if all were under $1000. Thank you. Robert

[Terry53029]

Assuming it will be residential rental this is from pub 527.

Under MACRS, property that you placed in service during 2023 in your rental activities generally falls into one of the following classes.

• 5-year property. This class includes computers and peripheral equipment, office machinery (typewriters, calculators, copiers, etc.), automobiles, and light trucks.

  This class also includes appliances, carpeting, and furniture used in a residential rental real estate activity.

[TaxGuyBill]

One thing to consider:  Does the taxpayer qualify for (and want to make) the De Minimis Election, which could allow him to deduct items up to $2500 as an expense?

If they don't qualify for (or want to make) the election, items that have a life of one year or less and items with a longer life that are $200 or less are deducted (supplies or whatever else).  As Terry said, the other "furnishing" assets are generally depreciated over 5 years (depending on exactly what "furnishings" means).

[robert-a]

Thank you Terry. I found 5 years as I researched. I advised client to take the ten items of 'furnishings' over $500 as depreciated items of furnishings. Speaking just an hour ago to my client, who is up in Weeki Wachee, and who sent me a photo by text, and had five feet of water in the Air B&B rental, the depreciated items placed in service on the 2023 tax will be accelerated on 2024 taxes.

[robert-a]

Thank you Bill!