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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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Can I deduct my new septic system if I have a home office

Resolved Question:

We bought a new house in December 2005. Last summer (July 2006), we had to replace the septic system -- nearly $10,000. I was self-employed with a legit home office all of 2006. Can I deduct the septic under repairs and maintenance for the entire house?
Submitted: 10 years ago.
Category: Tax
Expert:  RD replied 10 years ago.

You can deduct only a part of the repairs allocated based on square footage used for office over overall square footage. You cannot deduct the expense for the entire house

Link to information-

http://www.toolkit.cch.com/text/P07_2700.asp

 

Let me know if you have any question. Bonus and Feedback will be highly appreciated!!!

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases.

Customer: replied 10 years ago.
Reply to Renu V's Post: I understand the square footage equation. But do septic replacement fall under this repair category?
Customer: replied 10 years ago.
Are you there?
Expert:  RD replied 10 years ago.

Whether the replacement will be considered repair or improvement will depend on whether the replacement adds to the value of your home, prolong its useful life, or adapt it to new uses(in which case it is improvements) or the replacement is to fix failed septic system in order to keep it in running condition(in which case it is repairs).

So If the repair or improvement is simply maintaining the status quo, then it will be
treated as a deductible expense but if it creates something new, then it will have to be capitalized and depreciated.

Here is a link to additional information

http://www.toolkit.cch.com/text/P07_2733.asp

Let me know if you have any question. Bonus and Feedback will be highly appreciated!!!

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases.

 

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