Accounting and Bed Bugs

[Mitch Genser]

I am getting some mixed messages about how to deal with the accounting for bed bug remediation in an apartment building my company owns. Normal, regular and modest 'pest management' is clearly part and parcel of 'operating expenses' under Pest Management under O & M expenses. But what about the 'heat treatments' and chemical treatments (less expensive than heat!) that can run from a few hundred dollars to low $1,000's for a crazy bad situation requiring heat. Should these be treated as 'cap ex' as one colleague has suggested (he says HUD so categorizes as such but I have yet to see the documentation) or merely part of ordinary operating expenses? Clearly, mold remediation is a cap ex account since it falls under the 'betterment' and improvement of the building, etc. But what about the $7,500 of beg bug expenses we have laid out this year? I am researching some alleged insurance companies who say they have 'bed bug' coverate - separately written. Anybody know anything about that? But first - the cap ex discussion please. Thanks for your help!

[Will Barnard]

I am no CPA or expert in taxes, but would agree with the expert here. Any pest control costs are operating expenses as would mold remediation. Mold remediation typically requires some dry wall removal and replacement along with the paints, etc. Performing such work does not improve the value, only brings it back to what it should be as Steven pointed out.