How do I treat a major repair of my oceanfront seawall?

Forum|Forum|3 years ago
February 24, 2023
2 replies
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This is a rental property, and the seawall work may have to be depreciated over 27 years, but in fact, it will probably not last that long.

Or since it's a repair instead of something new, maybe not? Maybe it's just an ordinary repair? We're talking a more than $10K expense.

Best answer by Vanessa A

Did you fix the wall or did you replace or make such major improvements to it that it is like new?

If you simply repaired the wall, then you would expense it as a repair.

If you replaced the wall then you would depreciate it or you could take a section 179 deduction for the wall.

Once you decide if you repaired or drastically extended its useful life you can enter it as an expense or an asset. As you walk through the TurboTax entries, the program will help you decide if you want to take a full deduction for it or depreciate it over its useful life.

Vanessa AAnswer

Did you fix the wall or did you replace or make such major improvements to it that it is like new?

If you simply repaired the wall, then you would expense it as a repair.

If you replaced the wall then you would depreciate it or you could take a section 179 deduction for the wall.

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Hal_Al

Employee

Although the building and any components (e.g. new roof) have to be depreciated over 27.5 years, exterior improvements (e.g. road or fence) are depreciated over 15 years.

Reference: https://learn.roofstock.com/blog/rental-property-depreciation#:~:text=The%20IRS%20allows%20you%20to,a%2015%2Dyear%20depreciation%20period.

Carl11_2

Employee

If the seawall work was major and/or returned it to "like new" condition, classify it as a land improvement and it gets depreciated over 15 years. I'm not sure, but I "think" land improvements qualify for SEC179 and/or SDA if you want to accelerate the depreciation. I do know that MACRS classification "residential rental real estate" does not qualify for either accelerated depreciation method. But not sure if "land improvements" do or not.