What is simply a repair and what do I need to capitalize?

[Dylan Brown]

"What is simply a repair and what do I need to capitalize?"
I get this question a lot.


Back in 2015, we saw lots of clarifications around this issue. Luckily, I don't need to reinvent the wheel to explain it, there is a plethora of publications out there on it. Here is the gist:

T. Regs. §1.263(a)-3 (2015 Tangible Property Regulations):

The general rule of Regs. Sec. 1.263(a)-3 requires that amounts paid to improve a unit of property must be capitalized. An amount paid is considered an improvement to a unit of property if it results in:
(1) betterment,
(2) restoration, or
(3) adaptation to or of the unit of property.

What does that even mean?

That is where it gets a bit complicated...

Rather than explaining it, I just linked my FAVORITE resource (published by KBKG - Tax Credits, Incentives & Cost Recovery way back in 2018) that I still use to this day. I even use this graphic to help train new hires!


^^^^^^^^

If you are a CPA, download it.

If you have a CPA, download it and send it to them.

This is low-hanging fruit for anyone that owns real estate. Don't miss deductions just because you or your CPA didn't know the nuance of the Tangible Repair Regs.

[Dylan Brown]

@Austin Moore Sorry - try this!

https://tinyurl.com/repairflowchart