Septic system - 2017 paid for replacement design, license for local town. Can I claim that for 2017 AND claim 2018 replacement costs?

Specifically asking if I can 'double-dip" the credit or should I wait for the 2018 number as that will be substantially larger?  Thanks 🙂

JulieH1
New Member

Deductions & credits

Are you talking about a rental property?  

Septic Tank replacements and improvements such as yours increase the cost basis of your home which may benefit you at the time of sale but are not deductible. The higher cost basis, the lower your profit, the lower your tax bill.

If it is a rental property, the IRS considers a septic system to be a capital improvement rather than an expense on a rental.  So you'll depreciate it over 27.5 years rather than deducting it.  You could, however, possibly deduct the design and license in 2017 as expenses since you paid them in 2017.

Here is a link to IRS Publication 527, Residential Rental Property, which discusses all aspects of this topic.  Note table 1-1 beginning on page 5.

https://www.irs.gov/pub/irs-pdf/p527.pdf 

View solution in original post

Deductions & credits

I am not renting but am the owner.  Specifically, the TT App's HELP says (in the MA State section) The Septic Credit is available to owners of residential property who repair or replace a failed septic system.  So which is the accurate ruling / interpretation?  Thanks
JulieH1
New Member

Deductions & credits

Ok.  I wasnt sure if you meant for your state or federal.  I would wait until 2018 to get the max credit.