Is a new residential hot water heater considered 7 year property or 27.5 year property for depreciation purposes ???

[TaxGuyBill]

In my opinion, 27.5 years because it is critical portion of the plumbing system.

However, if your client qualifies for and make the De Minimis Election, perhaps it could be deducted under that provision.

[Just-Lisa-Now-]

and they do last a long time!

[dascpa]

Just took a class.  Instructor gave her "opinion" - hot water heater, dishwasher, and refrigerator are 5 year property.  Most hot water heaters come with a 10-year warranty (irrelevant but helps to make a case for a shorter life than an HVAC).  Agree on the De Minimis. IRS capitalization rules went from $200 to $500 and are now $2,500 with the proper capitalization policy (I try to get signed copy) for my files.  Instructor disagreed with the "critical portion of the plumbing system" concept.  Then proceeded with 20 minutes of class disagreeing with each other.

[TaxGuyBill]

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@dascpa wrote:

Just took a class.  Instructor gave her "opinion" - hot water heater, dishwasher, and refrigerator are 5 year property. 

Instructor disagreed with the "critical portion of the plumbing system" concept.

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In order for the water heater to be less than 27.5 years, it would need to be NOT part of the plumbing system (or be a specialized point-of-use water heater, which would usually be five years).  But I don't know how a person could claim it isn't part of the plumbing system, especially when Publication 527 calls it part of plumbing.

If a person views it as NOT a "critical portion of the plumbing system", then it would be a repair.  It would not make it depreciable asset using a different Recovery Period. 

But personally, I suggest taking a shower without a water heater and claim it isn't "critical".  🤣