Historical Bonus Depreciation: Records for Older Rentals
Understand why an older rental’s acquisition and service dates matter when a new cost segregation study revisits its depreciation history.
A new study does not create a new purchase
The historical bonus-depreciation schedule still matters for some older assets. A report commissioned now does not automatically move those assets into the rules for a current-year acquisition. Have the preparer determine the governing rules from the original facts, including contract dates, service dates, and elections.
Build a timeline rather than choosing one year
Start with the building acquisition and add each separately completed improvement. Then list furnishing purchases, replacements, personal-use conversions, and prior dispositions. Distinguish when an item was ordered, paid for, delivered, installed, and ready for its intended use. Those dates can differ, and an invoice alone may not resolve every question.
Keep prior returns with the property file
Provide prior depreciation schedules, the originally filed returns, amended returns, and any election statements or accounting-method changes. The provider should be able to reconcile its proposed components to the cost pool the preparer is reviewing. Missing records should be visible in an exception list rather than silently reconstructed as if certain.
Do not apply one rate to an entire portfolio
Two similar homes purchased in different years can have different histories. One may include a later furnishing package; another may have an election or a period of personal use. Organize the engagement by property and asset group. A single percentage across the portfolio can obscure those differences even if the floor plans match.
Coordinate implementation before ordering a final report
Ask the preparer what filing approach is appropriate for the facts and which records the study must supply. Do not assume every correction uses an amended return or every look-back uses Form 3115. Agree on responsibilities, expected filing costs, and unresolved questions before treating a preliminary catch-up estimate as a currently usable deduction.
Primary references
Educational information. The return preparer should verify current guidance and apply it to the taxpayer’s facts.