It's important to consult with a tax professional or accountant who is familiar with the specific tax laws and regulations in your area for accurate advice regarding depreciation and expense deductions.
Regarding the replacement of an air conditioner that used R22 coolant in a residential rental property, here are a few points to consider:
Depreciation: The cost of a new air conditioner would typically be considered a capital expense and may be eligible for depreciation over its useful life. The IRS provides guidelines for depreciating different types of assets, including residential rental property improvements. Generally, HVAC systems are depreciated over 27.5 years for residential rental properties.
Section 179 Expense Deduction: The IRS offers a provision called Section 179 that allows certain businesses to expense the full cost of qualifying property in the year it is placed in service, rather than depreciating it over time. However, residential rental properties are generally not eligible for Section 179 deductions. This provision primarily applies to business properties, and rental properties are considered passive investments.
State-specific regulations: While federal tax laws apply nationwide, individual states may have their own rules and regulations regarding depreciation and expense deductions. It's important to consult the specific guidelines provided by the State of California or seek advice from a tax professional familiar with California tax laws to understand any state-specific rules that may apply.
To accurately determine how to depreciate or deduct the replacement cost of the air conditioner in your residential rental property, consult with a tax professional who can assess your specific situation and provide guidance based on the most up-to-date tax laws and regulations. They will be able to advise you on the proper depreciation schedule and any potential expense deductions available to you under the IRS and State of California guidelines.