Repair, Restoration, Deductability?

We need to repair/replace much of our 1880's large veranda wood planks along with refortifying the underlying stone foundation and wood sills. Likely over $25K. Is any of this deductible as a repair ?

I'm not an accountant, but I play one in my role as an innkeeper.
IMHO, it's deductible as a repair. It can't be amortized as an improvement, however.
Always good to call your accountant to make sure, though.

I would claim it under repairs and maintenance.

You live in your house right? I would check with accountant..but I am thinking only a % because it is your residence. And maybe none??? Seems to me we repaired a porch roof and our CPA wouldn't let us use it as a decuction

PhineasSwann said:

I'm not an accountant, but I play one in my role as an innkeeper.
IMHO, it's deductible as a repair. It can't be amortized as an improvement, however.
Always good to call your accountant to make sure, though..

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We have set a capitalization threshold for projects like this -- less than $X, deduct as an expense; over that amount, add it into our table of fixed assets being depreciated. You could think about the cost of the project relative to the overall value of the building, or relative to the amount of turnover (gross revenue) in your business. If it is a small percentage, say for example less then 5%, then maybe treat it as a repair. But as Darren suggests, best to talk to your own accountant.
ETA: all of the fixed assets of our business are held by the corporate entity, so there is no apportionment of related expenses among personal vs. business -- it's all business. May be different if the building is also considered your primary residence.

EmptyNest said:

You live in your house right? I would check with accountant..but I am thinking only a % because it is your residence. And maybe none??? Seems to me we repaired a porch roof and our CPA wouldn't let us use it as a decuction.

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EmptyNest said:

You live in your house right? I would check with accountant..but I am thinking only a % because it is your residence. And maybe none??? Seems to me we repaired a porch roof and our CPA wouldn't let us use it as a decuction

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unless it is 100% for guest use is what we were told.

JoeyBloggs said:

EmptyNest said:

You live in your house right? I would check with accountant..but I am thinking only a % because it is your residence. And maybe none??? Seems to me we repaired a porch roof and our CPA wouldn't let us use it as a decuction.

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EmptyNest said:

You live in your house right? I would check with accountant..but I am thinking only a % because it is your residence. And maybe none??? Seems to me we repaired a porch roof and our CPA wouldn't let us use it as a decuction

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unless it is 100% for guest use is what we were told.
.

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I have 2/3 of my house listed as commercial (B & B), therefore any expenses of the house are 2/3 deductible unless it is guest area which would be 100%. Of course the roof covers 100 % of guest area, but I think that was still just 2/3.

It may depend on how your business is incorporated, or not. This year's business improvements apparently can't be written off as one time but will need to be depreciated.
But it depends on whether you, personally, own the building or a corporation owns it. And if you use this space for yourself. You can still divide it up into 'ours' and 'business' but you usually can't do that after the fact.
We, personally, don't own the inn. We own the corporation that owns the inn. We rent our space from the corporation so improvements to the building can be written off. Including the new entry we just had done.

Morticia said:

It may depend on how your business is incorporated, or not. This year's business improvements apparently can't be written off as one time but will need to be depreciated.
But it depends on whether you, personally, own the building or a corporation owns it. And if you use this space for yourself. You can still divide it up into 'ours' and 'business' but you usually can't do that after the fact.
We, personally, don't own the inn. We own the corporation that owns the inn. We rent our space from the corporation so improvements to the building can be written off. Including the new entry we just had done..

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Morticia said:

We, personally, don't own the inn. We own the corporation that owns the inn. We rent our space from the corporation so improvements to the building can be written off. Including the new entry we just had done.

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Ours is set up just the opposite. We own the property & corp owns the biz and pays us salary & lease payment.
Mama, definitely talk to a tax professional to see what works best for you.

Breakfast Diva said:

Morticia said:

It may depend on how your business is incorporated, or not. This year's business improvements apparently can't be written off as one time but will need to be depreciated.
But it depends on whether you, personally, own the building or a corporation owns it. And if you use this space for yourself. You can still divide it up into 'ours' and 'business' but you usually can't do that after the fact.
We, personally, don't own the inn. We own the corporation that owns the inn. We rent our space from the corporation so improvements to the building can be written off. Including the new entry we just had done..

Click to expand...

Morticia said:

We, personally, don't own the inn. We own the corporation that owns the inn. We rent our space from the corporation so improvements to the building can be written off. Including the new entry we just had done.

Click to expand...

Ours is set up just the opposite. We own the property & corp owns the biz and pays us salary & lease payment.
Mama, definitely talk to a tax professional to see what works best for you.
.

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Concur with talking to a tax pro (or really getting into the nitty gritty tax details yourself, if so inclined -- but even then you probably should just talk to a tax pro).
For those with a corporate entity, how the living space (or personal use vs. business use) gets handled also depends on whether your corporation is an S-corp or a regular C-corp, and your relationship to the owner(s) of the corporation (especially if YOU happen to be the owners).

Morticia said:

It may depend on how your business is incorporated, or not. This year's business improvements apparently can't be written off as one time but will need to be depreciated.
But it depends on whether you, personally, own the building or a corporation owns it. And if you use this space for yourself. You can still divide it up into 'ours' and 'business' but you usually can't do that after the fact.
We, personally, don't own the inn. We own the corporation that owns the inn. We rent our space from the corporation so improvements to the building can be written off. Including the new entry we just had done..

Click to expand...

I am the accountant. The POs did Sole Prop, so so did we. But we own 25%, which we count as our inhabitance? It's what we would have paid for a normal residence. We don't ever use the front porch for ourselves.
Wouldn't your new entryway be an amortized expense?

Momma Smurf said:

Morticia said:

It may depend on how your business is incorporated, or not. This year's business improvements apparently can't be written off as one time but will need to be depreciated.
But it depends on whether you, personally, own the building or a corporation owns it. And if you use this space for yourself. You can still divide it up into 'ours' and 'business' but you usually can't do that after the fact.
We, personally, don't own the inn. We own the corporation that owns the inn. We rent our space from the corporation so improvements to the building can be written off. Including the new entry we just had done..

Click to expand...

I am the accountant. The POs did Sole Prop, so so did we. But we own 25%, which we count as our inhabitance? It's what we would have paid for a normal residence. We don't ever use the front porch for ourselves.
Wouldn't your new entryway be an amortized expense?
.

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Momma Smurf said:

Wouldn't your new entryway be an amortized expense?

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Up until this year you were able to write the whole thing off at once. If it was in the budget to do so.
I think we need to have an in depth chat with the accountant before we get ready to sell. We need to figure out the taxable money situation in selling the business.

Morticia said:

Momma Smurf said:

Morticia said:

It may depend on how your business is incorporated, or not. This year's business improvements apparently can't be written off as one time but will need to be depreciated.
But it depends on whether you, personally, own the building or a corporation owns it. And if you use this space for yourself. You can still divide it up into 'ours' and 'business' but you usually can't do that after the fact.
We, personally, don't own the inn. We own the corporation that owns the inn. We rent our space from the corporation so improvements to the building can be written off. Including the new entry we just had done..

Click to expand...

I am the accountant. The POs did Sole Prop, so so did we. But we own 25%, which we count as our inhabitance? It's what we would have paid for a normal residence. We don't ever use the front porch for ourselves.
Wouldn't your new entryway be an amortized expense?
.

Click to expand...

Momma Smurf said:

Wouldn't your new entryway be an amortized expense?

Click to expand...

Up until this year you were able to write the whole thing off at once. If it was in the budget to do so.
I think we need to have an in depth chat with the accountant before we get ready to sell. We need to figure out the taxable money situation in selling the business.
.

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We haven't taken any depreciation at all except for minor Section 179 expenses.

See in the UK this all works in a completely different way
if you turn over more than 89,000 you have to pay value added tax at a rate of 10.5% of turnover but can only claim Value added tax back on items over £2000 (ie say a bathroom) or you can pay 20% but you can claim it back on anything you buy which is pretty much anything which is not basic food (ie eggs, milk bread etc) so you have to work out which is best for you ie doing a lot of renovation 20% is best and you can switch between the schemes
if you are less than 89,000 you don't pay VAT at all.
When you sell your property you have to pay Capital Gains tax on it which is worked out in a completely incomprehensible way with various deductions, and is worked out on the amount the property has gone up in price.
Also you have to pay income tax on any profit you make (we spend all ours) and tax and national insurance on your "wages" depending on what you pay yourself - if this is less than £111 per week you don't pay either of these but still get NHS (National Health Service) free cover if you are sick.

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If you use your home purely as your personal residence, you cannot deduct the cost of home repair. - Steve Thomas Rooney