1. It is 2025 so you know the full cost of the roof and can file or amend your 2023 return with the roof and cost.
2. No to paint and windows. You state that windows and paint were done in 2024 so they go on your 2024 return. Painting is a maintenance expense. The windows get tricky. If insurance paid for the windows, you don't need to capitalize, since you didn't pay for them. However, if insurance paid you and you paid for the windows, you do need to capitalize.
Capitalize vs repair:
If the windows were replaced due to storm damage and are considered a capital improvement (i.e., they improve the property), you would typically capitalize the cost and depreciate it over time. If it’s merely a repair (like fixing broken windows without changing them), you might be able to deduct the cost in the year incurred.
Reminders from Pub 527:
Decreases to basis.
You must decrease the basis of your property by any items that represent a return of your cost. These include the following.
- Insurance or other payment you receive as the result of a casualty or theft loss.
Gain from casualty or theft.
It is also possible to have a gain from a casualty or theft if you receive money, including insurance, that is more than your adjusted basis in the property. Generally, you must report this gain. However, under certain circumstances, you may defer paying tax by choosing to postpone reporting the gain. To do this, you must generally buy replacement property within 2 years after the close of the first tax year in which any part of your gain is realized. In certain circumstances, the replacement period can be greater than 2 years; see Replacement Period in Pub. 547 for more information. The cost of the replacement property must be equal to or more than the net insurance or other payment you received.
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