This depends on how you classify the nature of the new paving.
In accodance with the IRS publication on busienss expenses and rental expenses, this can be treated either way.
1. If the repaving is a repair of an existing surface, then it can be a repair. Repairs and maintenace can be expenses fully in the year they are paid for.
2. If this was an improvement, then it can be treated as a capital expense and added tot he cost basis, and depreciated over time.
Here is what I tell my clients who have rental properties with this kind of issue:
Thanks for the compliments.
I am using a number of sources. I want to add one caveat, to my comments. I assumed you were going to be making routine annual maintenanced to the drive way annually.
There is a little known rules about the expected lenght of time of a repair that could through it into a capital expense. If the repair is of a nature, that lasts MORE than 12 months, then it would be excepted, and have to be capitalized.
Generally, the nature of asphault is such that even though you may resurface it, there is an ongoing "resurfacing" that occurs with repairing and patching of pot holes, cracks and the application of asphalt (liquid) to the surface annually.
After reading my resouces, you may have a different opinion. Just remember, however you choose to treat it, you need to be consistent, and not change it up.
Note, I treate asphalt (not concrete or glassphalt) driveways in the same category as paint. consider that paind lasts from 5 to 15 years, and is still treated as an expense by the IRS for rental properties. Asphalt driveways, when resurfaced add to the esthetic beauty, but does not materiallly extend its life. The life expectancy of an asphalt surface is less than a paint job. Where as the life expectancy of an asphalt drive way at large is much longer.
Here are my resources:
NOTE: GPHR is a certification from the society of human resource management called Global Professional Human Resources. Certification as a GPHR means I have demonstrated knoweldge and expertice for cross boarder (international) taxes between the U.s. and foreing countries; international immigration, international employee relations, and international business operations.
OK, no I go with my orinal response, but lets work through it, we have time.
1. Do not conside the drive way....
Before the repair when the drive way existed, and when it was first installed, did it add value to the property?
If this were appraised, the drive way should have added value to the property when it was first built. (can we agree)
A number of years pass, and the driveway is deteriatting, but useful....it needs soem repair...maybe it can go another year, but I want to repair it this year.
Generally, if the propert were appraised on the day befor you repaired it. the appraiser would not have discounted the value of the property...Most appraisals, unless the driverway were in such disrepair as to be useless, would not discount the appraisal. The question would be, does it have a paved drive way, yes or no...So in all likely hood, the entire house and property were not depreciated because of the condition of the drive way. (can we aggree on this?)
Now comes the repair, did making a resurface increase the appraised value of the property or did it just make it look better, prettier, more esthetic looking? My guess is, that unless that drive way was unuseable, it did not increase the apprassal value of the home or land. (can we agree on this)
Then I would say this is like painting a house. There was no added value, even though it looked nicer and might be easier to market and sell.
While the depreciable life of the drive way is a 35 year property, in the constuction industy, black top or asphalt slab is a 100 year life property. When you were done, it was still a 100 year property. The life of the integral whole was not necessarily extended.
LOL, you are good.
The tax prep fees are deductable in the year they are paid. So since this is 2008, you would include them on next years return.
If you are on cash accounting, the check issue date is considered the date paid, so you would count it in 2007.
You are welcome, and best of luck to you.
If your final decision is to expense the drive way repairs, make sure the entery merely says, drive
Sorry, we were posing and looking at the same momemt...
I meant to say, make sure the entry is: driveway (or asphault) repair.
If the check was written in 2007, you can taken the deduction in 2007.