Partial foundation repair is considered an improvement?

Forum|Forum|1 year ago
March 7, 2025
1 reply
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We paid $36K in 7/2024 to fix a corner of our rental property’s foundation, due to damage that caused the soil in that area to sink and affected the structure of the house. Eight piers were installed to slightly raised the foundation in that corner. We had to perform this fix in order for the bedroom and bathroom doors to shut properly. Tenants were living there at the time of the project.
1) Is this considered an Improvement or Repair?

2) If it’s an improvement, would it be considered a RealEstate improvement or Land Improvement?

3) If it’s a repair, would I put this under “Repair” on Schedule E line 14?

Thank you in advance for your reply!

Not A Product Question

Mike9241

i think this falls under restoration of property that requires capitalization under reg 1.263(a)-3(k)

the restoration was to the building, not the land.

TaxLawAuthor

Thank you for your reply!

If I may ask a follow-up question:

When TT asked for in service date under depreciation, which date do I use:

1) the date I signed the contract of the project

2) the date I made the first of 4 payment installments

3) the date the inspector sign off on completion

thanks again!

PatriciaV

Employee

The "in-service" date for the improvement would be the date on the Certificate of Completion, generally the date the inspector signs off on the project.

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