Tax question
- Thread starter KK
- Start date
I don't think so. If you're talking about your house. Just like painting the house or replacing the shingles isn't either. Now if this was a business then yes it could be.
BrunoPuntzJones
Lifer
- Feb 24, 2001
- 14,513
- 4
- 81
I don't think anything but the original mortgage qualifies for that. Even then it's just the interest.
BrunoPuntzJones
Lifer
- Feb 24, 2001
- 14,513
- 4
- 81
Went and got one of my old books out and you be right. The interest on home equity loans is normally deductable. Of course there are a lot of restrictions but probably nothing that he would get into (like if the loan, combined with the current mortgage is above the fair market value of the house).
I dunno why I didn't think of that. We had an entire night devoted to that stuff :| That's why a lot of folks get home equity loans. Get a lower interest rate than credit cards (use the loan to pay them off) and the interest is tax deductible.
<----bonehead
I think it's kinda crazy to get a home equity loan. I certainly wouldn't want to put my home up as collateral.
As was said, unless the improvement is in the form of a home equity loan (where you may deduct the interest), or the improvement is to business/investment property, the capital spent on the improvements is not deductible.
**NOT A TAX ACCOUNTANT**
Same here. But I am an Attorney with tax experience, and helped run my law schools IRS VITA program.
**NOT A TAX ACCOUNTANT**
Same here. But I am an Attorney with tax experience, and helped run my law schools IRS VITA program.
No insurance against termite damage?
The repairs are deductible from the capitol gaines tax after reselling if nothing else.
The repairs are deductible from the capitol gaines tax after reselling if nothing else.
CPA
Elite Member
- Nov 19, 2001
- 30,322
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- 0
Not a tax specialist, but a CPA.
A couple of things said so far are correct in respects to the 2nd lien, but keep in mind also that if you sell the house you can include the costs of the new flooring as an improvement, which will be added to the basis of the house, thus eliminating some taxable gain in the year you sell the house.
But, neither of those scenarios are your current issue. One possible remedy in the current year would be to take it as a "casualty loss", which is a tax deductible event for destroyed, damaged or stolen property - personal or business-use. Unfortunately, the IRS, in all of their glorified wisdom, does not consider termite damage a casualty loss as indicated in the following exerpt of Topic 507:
If your property is destroyed, damaged, or stolen due to casualty or theft, you may be entitled to a tax deduction. A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual.
A sudden event is one that is swift, not gradual or progressive. It does not include damage from events such as termite infestation or deterioration from normal wind and weather.
So with that said, no you are not allowed to take this event as a loss or as a tax deductible event in the current year. But remember, when you sell the house, you will be able to add the "upgrade" as an increase to your adjusted basis in the house, thus lowering any tax gain.
*edit: Tominator beat me to the adjusted basis comment, sorry.
A couple of things said so far are correct in respects to the 2nd lien, but keep in mind also that if you sell the house you can include the costs of the new flooring as an improvement, which will be added to the basis of the house, thus eliminating some taxable gain in the year you sell the house.
But, neither of those scenarios are your current issue. One possible remedy in the current year would be to take it as a "casualty loss", which is a tax deductible event for destroyed, damaged or stolen property - personal or business-use. Unfortunately, the IRS, in all of their glorified wisdom, does not consider termite damage a casualty loss as indicated in the following exerpt of Topic 507:
If your property is destroyed, damaged, or stolen due to casualty or theft, you may be entitled to a tax deduction. A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual.
A sudden event is one that is swift, not gradual or progressive. It does not include damage from events such as termite infestation or deterioration from normal wind and weather.
So with that said, no you are not allowed to take this event as a loss or as a tax deductible event in the current year. But remember, when you sell the house, you will be able to add the "upgrade" as an increase to your adjusted basis in the house, thus lowering any tax gain.
*edit: Tominator beat me to the adjusted basis comment, sorry.
CPA
Elite Member
- Nov 19, 2001
- 30,322
- 4
- 0
Originally posted by: RaySun2Be
Those dasm termites stole his floor! :Q
Wouldn't that qualify?
You would think, but my guess is that if they allowed this, similar to they way they used to allow cc interest as a tax deduction, then every home owner in America would take it and they would lose billions of dollars.
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