Ask Tom Anything - January 28, 2022

Your questions answered plus determining the depreciation life of real property

In the comment section of a recent edition, Stephanie asked:

I have been recently spending some time reading about the transient basis rules. Under these rules the rental is considered non-residential and the class life for depreciation is 39 years. But how does that interact with QIP bonus depreciation? Each of these rental situations can get tricky.

From her comment, I see two questions:

1. How do you determine if a rental property is depreciated over 27.5 years or 39 years under MACRS?

2. Can you put qualified improvement property (QIP) in-service in a rental property?

I’ll tackle the first question in this post, and save the second question for next month.