The IRS ruled in 2012 that Earthquake Retrofitting is considered a "betterment", ie: improvement.
IRS Internal Revenue Bulletin:
2012-14
Guidance Regarding Deduction and Capitalization of
Expenditures Related to Tangible Property
"Earthquake
retrofitting encompasses various factual scenarios and could involve
substantial structural additions that strengthen the unit of property and that
may constitute betterments under the temporary regulations. Also, the temporary
regulations retain an example from the 2008 proposed regulations that
illustrates that certain amounts paid to strengthen a building to make it safer
in the event of an earthquake may constitute a betterment to the unit of
property."
Under the IRS rules,
a property is improved when it undergoes
a "betterment," an "adaptation," or a
"restoration." Each of these terms are defined in the IRS rules. In
simple terms, any expenditures that improve the property must be capitalized and
depreciated. These costs add to the property basis and are entered under
the Assets/Depreciation section of Rental
Property in TurboTax.
A repair is any expenditure that is not an
improvement. These costs are entered under Repairs in the Rental Property Expenses section of TurboTax.
See the screenshot
below for help navigating the Rental Property
input screen.
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