Determining CapEx or Repair for Rental

[David Goossens]

I've been preparing for tax season and when looking over my books, I noticed that I had a $7000.00 bill from my plumber. When I checked my maintenance log, I found that a section of the main sewer line was replaced because the bottom had rusted out over the years and was causing blockage. This job required excavation underneath the house and in the front yard. Since only a section of the sewer line was replaced, is this considered a repair, or would it be classified as CapEx? I read the post below where @Brandon Hall helped to clarify the differences between the two, but I'm still not sure. Any CPA's have an opinion on this?

https://www.biggerpockets.com/forums/432/topics/20...

[Brandon Hall]

@David Goossens Since it's above $2,500, we can't use the De Minimis Safe Harbor. So the next question is: does this expense constitute a Betterment, Adaption, or Restoration to the plumbing system?

While it could have been a very small portion of the plumbing system, my bet is that this will constitute a Restoration - meaning that without such a repair, the plumbing system would have been inoperable or close to it. Because it's classified as a Restoration, we will capitalize and depreciate over 27.5 years.

Just my guess. But in reality, no one on the forum will be able to tell you without understanding the necessary facts and circumstances.