Hey guys, love your show and mission. Have been a listener for years and have done consultations with KKOS in the past. I’m getting my EA certificate this month, much thanks for the inspiration (and the head start on studying!). I found something interesting while studying depreciation but am unsure. Here are my questions:
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Being that STRs are considered nonresidential real property, does that mean the special deductions for “roofs, heating, ventilation, and air conditioning property, fire protection systems, and alarm and security systems” and for Qualified Improvement Property are applicable to them, even if it’s a SFH zoned residential? I’ve never heard you guys talk about this before but it seems like an amazing benefit (dare I say, loophole?) that would help make up for the extra 12 years of depreciation. The only qualifier I can find is that they have to be considered nonresidential real property and it seems to use the same definition used for depreciating the building itself (§168(e)). Side note: Would the restoration of a few brick chimneys to the tune of $15k count as “roofs?” Don’t ask why I ask…
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Is the above special depreciation only available via §179 and therefore unable to create a loss in the current year? As opposed to regular old bonus depreciation. It appears QIP is eligible for bonus depreciation but that “roofs, HVAC, etc.” is not. I’ve been unable to find a clear answer.
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What exactly counts as a “Land Improvement” eligible for bonus depreciation? Would something like the grading of land and subsequent installation of a concrete driveway count? Would cost of demolition of a small structure in order to do that have to be depreciated separately? I’m seeing resources that list “Land Improvements” as eligible for bonus depreciation but having a hard time finding specific definitions of such.
Thank you guys so much in advance and I hope that (if legit) these special nonresidential deductions are on your radar!