IRonMaN
Level 15

@itonewbie wrote:

First of all, the law doesn't simply say "you can use bonus depreciation for used property".  There are strings attached - the property must have not used by the taxpayer at any time prior to acquisition from unrelated parties and other conditions outlined under §168(k)(2)(E)(ii) must be met.

I suppose you are looking to the regs of §263A for the definition of real property for purposes of determining the class life and, thereby, whether the houseboat is a qualified property for bonus depreciation.

Before I even venture to decide whether the houseboat is part of a real estate by virtual of being an IPS, I'd first look at whether the rental activity constitutes residential rental.  If I read between the lines, it probably doesn't meet the statutory definition under §168(e)(2)(A).

I'd then consider whether it's a nonresidential real property.  And here's where §263A could become relevant.  Based on the plain reading of §1.263A-8(c)(3), the houseboat will need to be "ordinarily remain affixed for an indefinite period of time" in order to be considered an IPS and part of a real property.  We don't have enough info from your question to say either way.

I may even draw on the preamble for the regulations of §865 to get a glimpse at the IRS' perspective on boats as IPS.  It is quite clear that the IRS is aware of the many possibilities but generally does not view structures that are not affixed as IPS.

Once you get all these out of the way, you should be able to determine what the class life is and whether bonus depreciation may be claimed.

 


But are we dealing with a houseboat or a boathouse? 


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