It's still a property improvement. If this is on your pri...

[Jemar]

No one is mentioning the fact there there is a loss . If you have a property and it incurs a loss from mold , that loss should be deductible. This is not a repair , its a loss . Isn't there a deduction for a loss that can be taken ? The money spent to retstore the apartment to normal is proof of the loss . Plus air sampling before and after the cleanup .  

[Opus 17]

Mold damage is not a casualty loss because it occurs slowly over time and would have been preventable with proper maintenance. A sudden flood from a burst pipe or tree branch through the ceiling can be a casualty loss, but not something that occurs gradually and is preventable.

[DanielV01 · Accepted solution]

@Jemar.  It depends.  In the eyes of the tax code, it is not as simple as that.  To be able to claim loss on the property, you must first dispose of the property.  A disposition occurs when you either sell it or get rid of it as completely worthless.  Once the disposition occurs, if the disposition price is less than the remaining value of the property, then, yes, there would be a deductible loss on a property held as a rental venture.  If the property was a personal property, then no loss can be claimed on the tax return.

And the situation is further complicated by the rules for recapturing depreciation.  For instance, let's say you began renting the home when it had a value of $100,000, and due to damage you can only sell the home for $30,000.  You might think that your loss is $70,000, but not so!  If in the years you were renting the home, the depreciation allowable was $50,000, then the loss you can claim is $20,000, even if you never took the depreciation itself.  Now, if you have expenses like air sampling and other mold-remediation efforts in connection with the property sale, these can be re-added to the basis of the home, and the loss will increase by these expenses.

But what you describe in your comment is in fact a repair.  The house is damaged by the mold, and all of the expenses involved in remediating the mold (not covered by insurance) would be deductible as repairs (not a remodel) if the purpose is to restore the home to it's original value.  These expenses would not need to be depreciated for a rental home.  However, as @Opus17 states, in a personal residence, these expenses are not deductible as loss.  

A remodel occurs when changes are made to the home that can improve it's value.  Painting a room to simply brighten it up or to repair faded or marked-up walls in and of itself is a repair.  However, painting your walls as part of a kitchen overhaul is a remodel, which must be depreciated in a rental home.

This TurboTax Help Article can assist to enter a rental property disposition:  I sold my rental property. How do I report that?

I hope this is helpful.

[Carl]

@DanielV01 this thread was originally started back in 2016 or 17 I think. Take note that the first few posts all have the same "exact" date/time on them, down to the minute. ( @GabiU  can explain why if needed.)

Seems that because of this, posts at the start are applying laws from before the 2018 tax changes, and current post apply the law after the changes. That makes this entire thread contradictory, misleading and confusing. Can this thread be archived please?