Re - capital improvement - Does trucking in top soil to cover tree roots in a yard, then seeding to improve mow ability qualify as a capital improvement?

[NCperson]

see page 9

https://www.irs.gov/pub/irs-pdf/p523.pdf

[Anonymous]

I think the top soil and seeding are two different events and so should be looked at separately 

Definition of a Capital Improvement
A capital improvement is a property update that will extend the “useful life” of the property. The thinking here is that it is not just a short-term fix, rather it is something that will add value to the property for years to come.

Improvements are usually more extensive than repairs and usually involve greater cost. Improvements include:

Adding something that was not previously there
Upgrading something that was existing or
Adapting the asset to a new use
Examples of Improvements:
Adding an Addition
Adding Central Air Conditioning
Installing a Security System
Installing Brand New Hardwood Flooring
Replacing an Entire Roof
Replacing All Existing Plumbing
Replacing All Existing Electric
Renovating a Kitchen
Renovating a Bathroom
Replacing All Windows
Adding a Deck
Building an In-ground Pool

Definition of a Repair
A repair is necessary maintenance to keep the property in habitable and working condition. The IRS defines repairs as those that “do not add significant value to the property or extend its life.”

When something is repaired, it is generally restored to its previous good condition, not improved upon. Repairs can usually be completed for a reasonable amount of money. Replacements of broken appliances are usually also considered as repairs.

Examples of Repairs:
Refinishing a Wood Floor
Repainting a Room
Repairing a Roof
Repairing Existing Plumbing
Repairing Existing Appliances
Replacing a Doorknob
Replacing a Window
Replacing a Broken Smoke Detector
Replacing Rotted Floorboards
Replacing Cracked Floor Tiles
Updating Old Appliances

[Carl]

If it qualifies as a capital improvement, it would be a non-depreciable land improvement. So the question is, "does it add *real* value to the property?"

Property Improvement.

Property improvements are expenses you incur that add value to the property. Expenses for this are entered in the Assets/Depreciation section and depreciated over time. Property improvements can be done at any time after your initial purchase of the property. It does not matter if it was your residence or a rental at the time of the improvement. It still adds value to the property.

To be classified as a property improvement, two criteria must be met:

1) The improvement must become "a material part of" the property. For example, remodeling the bathroom, new cabinets or appliances in the kitchen. New carpet. Replacing that old Central Air unit.

2) The improvement must add "real" value to the property. In other words, when  the property is appraised by a qualified, certified, licensed property appraiser, he will appraise it at a higher value, than he would have without the improvements.

More than likely what you've done does not qualify as a property improvement. However, if the expense was incurred while the property was classified as a rental, those costs could be claimed as a maintenance expense. But *ONLY* if you incurred the cost while the property was classified as residential rental real estate. The cost would then be claimed as a rental maintenance expense on SCH E.