Posted by Frank Chin on December 26, 2004 at 08:09:28:
DaveT:
There’s so many exceptions that it’s hard to tell what’s right and what’s wrong. For instance:
1- With the “turn the building upside down” rule, W/W carpets and window blinds attached to the walls won’t fall out, yet I’ll be depreciating them as 5 year items as carpets and blinds rarely last more than 5 years.
2- I used to depreciate hot water tanks 27.5 years under the threory that its attached to the structure. But they last 7 years for me on the average, and I wound up expensing the remaining life for them (20 years), and then taking bonus depreciation for new ones, under the current rules, then taking the $15.00 to $20.00/year for the remaining life. The depreciation aspect got so complex that my CPA was pulling his hair out, and begged to expense stuff under $600.00, i.e. covering my water tanks.
BTW, each time I expense off an old water tank with 20 years more to go, and take bonus dep., the amount deducted for the year is not much different than if I just expensed the new water tank. In fact, at one point when hot water tanks broke, it took less time for the plumber to replace it (about one hour), and more time to figure out the depreciation issues, and update my depreciation spreadsheet.
So when the tank breaks, I say “man, it’ll be an hour of work to do all that paperwork!!”
3- I’ve been to hotels where bed headcboards and night tables are screwed to the wall, and wonder if that a fixture, part of the structure or a piece of furniture.
I have a new accountant who says I should write off kitchen and bath cabinets over 5 years. I’ve always figured it was part of the 27.5-year “real estate,” not personal property. Any thoughts from anyone in this group?
Re: Depreciate kitchen cabinets over 5 years??? - Posted by Frank Chin
Posted by Frank Chin on December 25, 2004 at 06:00:39:
Mark:
I always interpreted 27.5 depreciation to apply to things that is part of the structure of the building.
On the other hand, I don’t think “kitchen cabinets” is part of the structure. In the instructions for form 4562, page 5, one of the items lists as 5 year property is “Applicances, carpeting, furniture use in residential property”.
I would put kitchen cabinets in the furniture category.
On the other hand, I had a discussion with my CPA about doors as 7 year property, as they are attached to the building, but not part of the structure though he disagreed. I told him there were a number of doors replaced several times already in the 20 years I own the place.
Re: Depreciate kitchen cabinets over 5 years??? - Posted by Dave T
Posted by Dave T on December 25, 2004 at 18:19:57:
I guess I am more conservative. I look at anything that is permanently attached as a fixture and part of the structure, 27.5 year depreciation schedule for those cabinets on my logic.
If I take off the roof, pick up the building and turn it upside down, then anything that falls to the ground is personal property which gets either a 5 or 7 year depreciation schedule. Things that fall out are usually appliances (such as washer, dryer, refrigerator, range if not built in), furniture (if the unit is furnished), and area rugs (carpeting). Wall to wall carpeting is just a big area rug.