How many years do I depreciate a new furnace installed as an improvement on residential rental property and what method do I use to compute the depreciation?
Like any other Electrical Device used at home or in the office, furnace also needs maintenance. When the furnace fails to give its best performance, it’s time to replace it. Old furnace emits more Carbon Monoxide which has some bad effects on human health. The best way is that it must be certified regularly by expert heating contractor. For more tips on how to take care of your furnace, click here.
Replacement of a furnace in a residential rental property is a capital improvement to the structure. The furnace is in the same class of property as the property in which it is installed. Since the property is residential rental property, the furnace is, generally, depreciated over a recovery period of 27.5 years using the straight line method of depreciation and a mid-month convention. For more information, refer to Publication 527, Residential Rental Property, and Publication 946, How to Depreciate Property.