@Opus 17 wrote:
The actual final rules are here.
https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations
That link does not contain the actual final rules but, rather, a summary written by who-knows-who at the IRS. The Regulation that would be directly applicable in this instance, with respect to improvements, would be 1.263(a)-3(g)(1).
(i) In general. A taxpayer must capitalize all the direct costs of an improvement and all the indirect costs (including, for example, otherwise deductible repair costs) that directly benefit or are incurred by reason of an improvement. Indirect costs arising from activities that do not directly benefit and are not incurred by reason of an improvement are not required to be capitalized under section 263(a), regardless of whether the activities are performed at the same time as an improvement.
(ii) Exception for individuals' residences. A taxpayer who is an individual may capitalize amounts paid for repairs and maintenance that are made at the same time as capital improvements to units of property not used in the taxpayer's trade or business or for the production of income if the amounts are paid as part of an improvement (for example, a remodeling) of the taxpayer's residence.
The issue might then be whether the amounts spent (in total) constitute a "remodeling" which, of course, is nowhere defined.
@Opus 17 wrote:
@Carl 's example of an in-ground pool would be an adaptation to a new use even if it doesn't raise the property value.
That was my example to illustrate that an "improvement", "betterment", "adaptation", et al does not necessarily require that an appraiser, for instance, would appraise the property at some increased "value" in order for it to qualify for federal tax purposes. The cost is the cost and that cost can be added to the basis regardless of whether the property's "value" is increased.
