Can new flooring over badly stained carpet be considered a repair

[Victoria Stone]

My accountant says that if the carpet is badly stained, replacing it with new flooring might be considered a repair.  Is this true?  The carpet has also been torn up in one small patch.  Other than that, it is just very badly stained. 

[Wendy Hoechstetter]

Yes, it is almost undoubtedly a repair.  Carpet, like many other elements in a house, does need to be replaced periodicallly, like windshield wipers on your car, which is why no warranty on a car will cover things like that.  That is part of normal wear and tear, and basic maintenance of a home, and adds no value.  It's really no different than refinishing existing flooring or repainting, replacing a broken window, or buying a new washing machine when the existing one dies.

Now if you were to do something like upgrade to hardwood floors from carpet, that might be a different story.  That is much more likely to be considered a capital improvement, at least in part.  Ditto with things like adding a washing machine or dishwasher where there wasn't already one before, installing new windows as part of a major kitchen remodel that requires their reconfiguration, and so forth.  Understand the difference? 

Not everything is very black and white, however, and a lot may depend in some situations on how much useful, depreciable life is considered to be left in the asset replaced.  Useful life is entirely a tax concept that determines how long you can deduct a given investment in an asset, and has nothing to do with how long something will actually last and be serviceable. 

Now if you've just bought the place and have to rehab/remodel it, as opposed to work done on a property you've already owned for a while, I don't know how it would be treated.  It might be different, but I don't know.

In any event, I would listen to your accountant, because he has a far better idea of what the IRS will have to say, than we do, particularly in any given situation, and the IRS's opinion is what counts.

I would highly recommend, however, that you not install anything *over* carpet.  That will cause almost anything to fail and wear out far faster than normal, probably void any warranties, plus will likely create a trip hazard at doorways and perhaps unsteady walking conditions across the expanse of the flooring, which would be a hazard to health and safety in itself and expose you to liability if someone were to get hurt as a result.  Pull the carpet up, prep and level the subfloor appropriately, then lay the new flooring, whatever you choose.