Permitted by DEP - Rip Rap

Forum|Forum|6 years ago
March 9, 2020
8 replies
27 views

My property was hit hard due to a flood. DEP approved and permitted a Rip Rap project. I was told that there is a deduction for this since FEMA nor any government agency helped fund it. Can this be considered under the 'Losses' deduction?

Opus 17

Level 15

Did you actually pay to do something? What was it?

0816Author

Level 2

We followed DEP permit requirements. We hired a company that is experienced with this type of work. We had many tons of rip rap placed as noted by the permit. Total job cost for us was $189,000.

Opus 17

Level 15

Any improvements you pay for that you make to real propery—that is to say, land you own and anything that is permanently attached to or part of the land—adds to your cost basis. It is not a tax deduction when you make the improvement, but it may reduce your capital gains when you sell.

there might be additional state tax benefits for environmental improvements to your land, but there are no special federal tax deductions or credits. You would have to review the state program module carefully, or ask a local tax preparation expert for advice on your state tax policy. Note that if you do receive a deduction or credit at the state level, you have to treat that as a reduction in the cost basis adjustment when figuring the capital gains calculation.