Capitalize vs Expense

Hi all,

I had to have a huge repair done in 2021 on one of my rental properties. The original plumbing was improperly installed and so they had to go in and tunnel under the house to dig up the sewer line due to faulty work, roots, improper sizing, venting and code violations. Two toilets, tub, shower and sewer had to be repaired and brought up to code. The total was a little over $10,000. Can this be expensed as a repair or capitalized over 27.5 years?

Thank you!

Whitney

460

Level 15

Mar 17, 2022 9:38:52 AM

Can this be expensed as a repair or capitalized over 27.5 years?

They have to be capitalized and depreciated over 27.5 years, because once completed, the work became "a physical part of" the structure and if it did not add to the value of the property, it most definitely retained it's value.

Level 15

Mar 17, 2022 9:42:40 AM

might want to sue the sellers for failure to disclose structural deficiencies. see a lawyer

Why sign in to the Community?

Capitalize vs Expense