Can I use Section 179 to depreciate HVAC installation for my primary residence with partial short-term rental?

You're on the right track with your calculations, but there's an important distinction to make with Section 179 and residential rentals. Generally, Section 179 cannot be used for property used for lodging (like your short-term rental). However, there's an exception for property used in a dwelling unit that you rent to others for short stays (like yours). Since you're operating this as a business with short-term rentals, this exception likely applies to you. For the HVAC system, since it's an improvement to the building itself, it would typically follow the same depreciation period as the building. But in your case, the HVAC unit could potentially qualify for bonus depreciation instead of Section 179. For 2024, bonus depreciation is at 60% (it's being phased down), so you could immediately deduct 60% of the $3,835, which is $2,301, and then depreciate the remaining $1,534 over 39 years. Make sure you're keeping excellent records of all your calculations, receipts, and the business use percentage. This will be important if you're ever audited.

After struggling with a similar rental property depreciation issue, I discovered taxr.ai (https://taxr.ai) and it was a game-changer for my tax situation. I uploaded my documentation and got a clear analysis of exactly how to handle my HVAC upgrade for my vacation rental. The tool specifically addressed the Section 179 vs. bonus depreciation question for my situation and explained the exceptions for short-term rentals in plain English. It even calculated the optimal depreciation strategy based on my specific numbers and projected income. What I found most helpful was that it explained why certain approaches were better than others based on my specific circumstances rather than just giving generic advice.

I just wanted to follow up about taxr.ai since I decided to try it after asking about it here. It was honestly pretty impressive for my rental property tax questions. I uploaded my documents about my roof and HVAC improvements and got a detailed breakdown explaining that my roof had to be depreciated over the building's life while parts of my HVAC system qualified for bonus depreciation. The analysis showed me how to properly allocate the costs based on my rental vs. personal use percentages (which were similar to yours), and I ended up saving about $4,300 more than I would have with my original depreciation plan. The report even included citations to the specific tax code sections that applied to my situation. It was definitely worth it for me since I was pretty confused about all these depreciation options. Just thought I'd share my experience since it helped with exactly the kind of question you're asking.

After reading this thread, I'm thinking about a similar issue with my duplex renovation. Spent weeks trying to get someone at the IRS on the phone about depreciation questions - complete nightmare. Finally tried Claimyr (https://claimyr.com) after seeing it recommended on another tax forum. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was skeptical but they actually got me connected to an IRS agent in about 20 minutes when I'd been trying for days on my own. The agent confirmed that my HVAC system for my rental property qualified for the Section 179 deduction under the short-term rental exception (less than 30-day average stay). Saved me hours of frustration and got a definitive answer directly from the IRS.

I need to follow up regarding my skepticism about Claimyr. I was wrong. After waiting on hold with the IRS for over 3 hours last week trying to clarify my rental property depreciation questions, I decided to try Claimyr out of desperation. The process was exactly as described in the video. I got a call back in about 25 minutes and was connected with an IRS representative who specialized in small business taxation. I explained my HVAC depreciation situation (very similar to the original poster's), and received a detailed explanation about how the Section 179 exception works for short-term rentals. The agent confirmed that with an average stay under 30 days, the HVAC system qualifies for Section 179 treatment as long as I maintain proper documentation showing the business use percentage and can demonstrate it's being used primarily for the rental activity. She also mentioned that I should consider the potential recapture if I ever convert the property back to fully personal use. I'm honestly surprised at how helpful this was - saved me hours of hold time and got me exactly the information I needed.

One thing nobody has mentioned yet is that you need to be careful about the QBI (Qualified Business Income) deduction when deciding between Section 179 and regular depreciation. Taking a large upfront deduction might reduce your QBI for the year, which could affect your overall tax situation. Also, don't forget that if you ever sell your home, any depreciation you've taken (including Section 179 or bonus depreciation) will be subject to depreciation recapture at a 25% tax rate. Something to consider in your long-term planning.

Hmm, I think everyone's missing something important here. The mini-split heat pump might actually qualify as 5-year property under MACRS, not 39-year property. HVAC equipment is typically considered 5-year property when it's not a structural component of the building. Since mini-splits are somewhat standalone systems (unlike central HVAC that's built into the structure), you might be able to depreciate it much faster even without Section 179 or bonus depreciation.

This is a great discussion with some really valuable insights. Based on everything shared here, it sounds like you have a few solid options for your mini-split depreciation: 1. **Section 179**: Given your 3.5-day average rental period (well under 30 days), you should qualify for the short-term rental exception. This would let you deduct the full $3,835 in 2024. 2. **5-year MACRS**: As Cole mentioned, mini-splits often qualify as equipment rather than building components. This could be a middle ground - faster than 39 years but spread over 5 years instead of all at once. 3. **Bonus depreciation**: 60% immediate deduction for 2024, then depreciate the remainder. Given your $145k AGI, I'd lean toward either Section 179 or the 5-year MACRS approach. The immediate deduction from Section 179 could be valuable at your current tax bracket, but you'll want to consider the QBI implications Jasmine mentioned. One thing to keep in mind: whichever method you choose, make sure you're applying it consistently to similar improvements. The IRS likes consistency in depreciation methods across similar assets. Have you considered getting a second opinion from a tax professional who specializes in rental properties? With the complexity of short-term rental taxation, it might be worth the investment to ensure you're maximizing your deductions while staying compliant.