Some of the clarifications included in the new regulations:
Expenditures must be capitalized if they are for permanent improvements that increase the value of the property, substantially prolong its life, or adapt it to a new or different use.
Repair type expenditures made before the building or apartment is put in service (i.e. has a tenant) have to be capitalized.
Thus, the temporary regulations retain the bright-line rule that requires a taxpayer to capitalize costs that are incurred prior to the date a unit of property is placed in service.
T.D. 9564
Guidance Regarding Deduction and Capitalization of Expenditures Related to Tangible Property
