Accelerated depreciation for rentals?

Question

I have heard that depreciation can be accelerated on all but the land - which cannot be depreciated at all.  After some investigation, it appears that even the building itself can only be depreciated for 27.5 years and it's the fixtures and other items like parking areas, appliances, etc. that can be depreciated in shorter time periods.  Any feedback or clarification you can provide will be welcome!

Yonah Weiss · Answer

Thank you for summoning me  @Taylor L. 😁

@Randy B. your findings are correct. Properties are depreciated on the MACRS (The Modified Accelerated Cost Recovery System), which defines building and structural components of a residential (including multifamily) property on a 27.5 year schedule. Other components in the property like furniture, carpeting, fixtures, pavement, landscaping, etc. depreciate on a faster schedule and can be properly accelerated through a cost segregation study.

Taylor L. · Answer

Cost segregation! Time for you to look up the man, the myth, the cost seg legend @Yonah Weiss. He explains how it all works very clearly. He's been on a number of podcasts and has his own as well.

Randy B. · Answer

Thanks Yonah.  I watched a couple of your YouTube podcasts/interviews and also talked with my CFP/tax preparer who is a REIA member here in WA state.    My opinion at this point, since all I have is one 4-plex (not commercial), it wouldn't make sense to spend the money for a cost segregation report.  For only one multifamily residential property, my CPA feels like he can do the job without a formal report. Your opinion?

Randy B. · Answer

Will do - thanks!