Rental Property 3115

New client put rental real estate into service during 2018. Sch E, 1040. The client did a rehab before getting it into habitable condition and advertising. On the 2018 return, the client reported quite a bit of what were improvements to the building structure and building subsystems as 5yr assets and subsequently took S179 on them. Client is an RE pro. 2019 has been filed. 2020 has not been filed yet and is on extension.

Is my only option here to recalculate S179/depreciation and do a 3115 in 2020? I am amending 2018 and 2019 for an unrelated reason, so we have to amend regardless.

Is it residential or a commercial rental? Could the improvements qualify as qualified improvement property? Did they elect of bonus on the 2018 return? Did you prepare the initial 2018 return?

I think if you go back and amend both years, you don't have to file the 3115.

I know Coddington knows this right off hand, though

Since it involves 179, you'd have to go back and amend 2018 and 2019.

Since it involves 179, you'd have to go back and amend 2018 and 2019.

Thanks. I wasn't sure of the S179 dynamic.

Is it residential or a commercial rental?

Residential.

Did they elect of bonus on the 2018 return?

No.

Did you prepare the initial 2018 return?

"New client". I will be the preparer of the original 2020 return. The client self-prepared the original 2018 and 2019 returns.

I should note that amending only gets them back to the original classification, i.e. 5-year property. You would then file a Form 3115 in 2020 to make it 27.5-year.