Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

I have a rental property that has gh radon levels, can I…

Customer Question
I have a rental property...
I have a rental property that has high radon levels, can I deduct the cost of the mitigation system in the tax year it was installed as a expense item, or do I need to deduct the cost of the system over time? I could not ethically rent the property one I knew about the high radon levels.
Submitted: 2 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 4 minutes by:
3/2/2016
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,894
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

That's an expense IF it was between renters ... that kind of expenditure, if done BEFORE property was placed into service needs to be capitalized as ANY repairs needed to get the property ready to rent.

...

Was this an existing rental?

Ask Your Own Tax Question
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

See this from the IRS' recent clarification on capital expenditures vs current year deducions

...

:

Repair type expenditures made before the building or apartment is put in service (i.e. has a tenant) have to be capitalized. Although clean-up and repair expenses occurred over a few day lapse between an old tenant moving out and a new one moving in should be deductible as a ‘turnover’ expense.

...

One of the examples given in the regulations is as follows:

...

In year 1, X purchases a building for use as a business office. Prior to placing the building in service, X incurs costs to repair cement steps, refinish wood floors, patch holes in the walls, and paint the interior and exterior of the building. In year 2 the building is placed in service. Even if the things that were done did not constitute an improvement to the building or its structural components, the amounts paid must be capitalized as costs of acquiring the building because they were for work performed prior to X’s placing the building in service

...

Consequently, if a taxpayer purchases a building which comes with the need to fix or repair a lot of deferred maintenance before being able to rent it, those expenses still must be capitalized; they are not a current deduction.

Ask Your Own Tax Question
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

So again, if this was discovered after the property was already placed in service and had to be repaired before it could be rented again, it's an expense. (tax policy/logic here is that you are bringing it back up to where is was, in terms of it's usefulness in the activity)

..

But if this was something that was done prior, EVER, to renting it out ... It's part of what had to be done to MAKE it rent-able in the first place, just as any other initial investment to get the property ready.

...

The way any taxing authority will look at this is as follows:

...

You decision to buy and invest, initially, is based on your costs to get the property in shape to rent ... If those costs are too much to make it a good investment, you don't buy.

...

If you DO buy, then whatever you had to do to get the property ready to rent is a capital expenditure and is depreciated.

...

Please don't shoot the messenger here :0)

...

I hope you’ll rate me (using those stars, rating request, or faces on your screen) based on thoroughness and accuracy, rather than any good news / bad news content. That’s the only way I’ll be credited for the work here. But please let me know if you still have questions.

Thank you!

Lane

Ask Your Own Tax Question
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

P.S.

...

Rather than quoting simply from IRS, I thougth it might help to show you a very good interpretation of the new rules.

...

Again nothing different from what I've told you, but a good reinforcement

...

From the attorneys at nolo.com

..

What Is an Improvement under IRS Rules?

Under the new IRS regulations, property is improved whenever it undergoes a:

  • Betterment
  • Adaptation, or
  • Restoration.

Think of the acronym B A R = Improvement = Depreciate.

...

If the need for the expense was caused by a particular event--for example, a storm--you must compare the property's condition just before the event and just after the work was done to make your determination. On the other hand, if you’re correcting normal wear and tear to property, you must compare its condition after the last time you corrected normal wear and tear (whether maintenance or an improvement) with its condition after the latest work was done. If you’ve never had any work done on the property, use its condition when placed in service as your point of comparison.

...

Betterments

An expenditure is for a betterment if it:

  • ameliorates a “material condition or defect” in the property that existed before it was acquired or when it was produced--it makes no difference whether or not you were aware of the defect when you acquired the unit of property, or UOP (discussed below)
  • results in a “material addition” to the property--for example, physically enlarges, expands, or extends it, or
  • results in a “material increase” in the property's capacity, productivity, strength, or quality.

...

Restorations

An expenditure is for a restoration if it:

  • returns a property that has fallen into disrepair to its “ordinarily efficient operating condition”
  • rebuilds the property to a like-new condition after the end of its economic useful life, or
  • replaces a major component or substantial structural part of the property
  • replaces a component of a property for which the owner has taken a loss, or
  • repairs damage to a property for which the owner has taken a basis adjustment for a casualty loss.

...

Adaptations

You must also depreciate amounts you spend to adapt property to a new or different use. A use is “new or different” if it is not consistent with your “intended ordinary use” of the property when you originally placed it into service.

...

Hope this helps

...

Lane

..

Ask Your Own Tax Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Lane Your Own Question
Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,894
14,894 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

Lane is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,512 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
We just started renting out our rv for months now. Wharf
We just started renting out our rv for months now. Wharf deduction are allowed for business use. I get questionsome why is rv rental tax so high in Arkansas 20.9 percent. I have not found a source to … read more
Dr. Fiona Chen
Dr. Fiona Chen
President
Ph.D.
1,435 satisfied customers
We fixed up our basement garden apartment to be rented out
We fixed up our basement garden apartment to be rented out in 2015... What items from the remodel can we get deductions for and what type of documentation of permits is required for the federal govern… read more
Lane
Lane
JD, CFP, MBA, CRPS
Doctoral Degree
14,894 satisfied customers
I have 2 rental properties. I bought a foreclosed house in
I have 2 rental properties. I bought a foreclosed house in Apr. 2015 (with cash) as my 3rd property. I had to do some major repairs like rework the plumbing, a new roof, new downspouts, a new window a… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
My husband and I rented out our primary home while away for
My husband and I rented out our primary home while away for work for the year (2014). We rented at a low rent, below our carrying costs for the house. I believe we are supposed to treat our primary ho… read more
Megan C
Megan C
Certified Public Accountant (CPA)
Master's Degree
8,655 satisfied customers
This is for PD Tax. Often leases of business property are
This is for PD Tax. Often leases of business property are in the form of “net leases” which require the tenant to pay not only rent but some specified expenses of the landlord that are directly relate… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
Someone I know has bought a property on a land contract. So
Someone I know has bought a property on a land contract. So basically from what I understand, he is renting the property for a period of time and at the end of that period of time the rents collected … read more
WebCPA
WebCPA
Manager
Bachelor's Degree
62 satisfied customers
I purchased a residential rental property in 2011 as an
I purchased a residential rental property in 2011 as an investment. Can I deduct start-up (pre-rental) expenses in the current period? If not, can I add them to the basis of the house and amortize the… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I moved out of my home in Nov 2011, but didnt rent the property
I moved out of my home in Nov 2011, but didn't rent the property until late March. Prior to moving I made several improvements to the home in 2011 to make it more attractive for renting the property. … read more
Shawn P. Adamo
Shawn P. Adamo
CEO
Bachelor's Degree
18 satisfied customers
We are trying to start a new business. So far we have bought
We are trying to start a new business. So far we have bought two properties. We have remodeled them but are not going to sell until the market changes. We have bought low with the idea of selling high… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have a client with a family partnership. The partnership
I have a client with a family partnership. The partnership owns a rental property in Rhode Island. It is mostly summer rentals with substantial income. I am preparing teh form 8825 for the rental. Thi… read more
fastfile
fastfile
Tax Advisor
Master's Degree
550 satisfied customers
I am Uk working in NYC for the last 18 months. In 2011 I rented
I am Uk working in NYC for the last 18 months. In 2011 I rented my london house out. I made $21000 in rental income , my deductions including mortgage interest, repairs and depreciation of property is… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
I am putting in Solar panels on my principal residence in early
I am putting in Solar panels on my principal residence in early 2012. There is a 30% tax credit. I share/rent a portion of the house with a person who lives in 30% of my home's area. Am I able to get … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
How do I set up a rental on current home where we will rent
How do I set up a rental on current home where we will rent to 3 serparate family members (Parents and an Aunt) which will total to below FMV rent? I would like to depreciate but cannot if not at FMV.… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I moved from NC in 2009 to AR to accept a job. My husband
I moved from NC in 2009 to AR to accept a job. My husband and I placed our NC house on the market and rented a home in AR. It has been 14 months and the NC home still has not sold. For 2010, can we de… read more
Jacy
Jacy
Bachelor's Degree
567 satisfied customers
Hello, I have income property ( a single family houe that
Hello, I have income property ( a single family houe that I have rented out for many years. Due to a fire, the unit was vacant for most of 2009 while I was fixing it up to receive tenants. My homeowne… read more
CPAforHire
CPAforHire
Bachelor's Degree
67 satisfied customers
I bought a 4 bedroom 2,200 sq. ft. house in November for 190k.
I bought a 4 bedroom 2,200 sq. ft. house in November for 190k. Title is joint with my wife. 20 percent down, 30yr fixed mortgage. Monthly payment including mortgage, taxes, insurance is 1,279. It appr… read more
Chad Oberg
Chad Oberg
Director
Bachelor's Degree
172 satisfied customers
I had a new roof installed on my rental property (COST OF $4,700)
I had a new roof installed on my rental property (COST OF $4,700) in 2008. I know that this type of item usually needs to be depreicated over time, but if I had a profit on the property last year, can… read more
Merlo
Merlo
Tax Consultant
558 satisfied customers
Can you write off the travel for attending an annual ...
Can you write off the travel for attending an annual owner's meeting for a condo you own out of state?… read more
Ed Johnson
Ed Johnson
Senior HR Consultant and Business Devlpm
Bachelor's Degree
6,994 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x