From TaxAlmanac, A Free Online Resource for Tax Professionals
From TaxAlmanac
Discussion Forum Index --> Advanced Tax Questions --> Environmental Costs deductible
Discussion Forum Index --> Tax Questions --> Environmental Costs deductible
Bobw12 (talk|edits) said:
| 1 October 2007
|
| Is there a basis in the tax code for expensing the cost of environmental cleanup required before occupying or improving resindential rental property? If not, what would the depreciable life be?
|
JAD (talk|edits) said:
| 1 October 2007
|
| Sounds like any cost would be capitalized under that scenario. Then you get to determine portion that should increase land (nondepreciable) vs real estate (27.5 yr life). If you are the entity that caused the environmental damage in the course of your business, and you are subject to 263A, then costs must be capitalized to inventory, but that doesn't sound like it applies to you.
|
Dennis (talk|edits) said:
| 1 October 2007
|
| Sec. 198 would I believe allow current deduction if it happened while you owned the property. If you are buying contaminated property the cost is built into the purchase price.
|
Bobw12 (talk|edits) said:
| 2 October 2007
|
| I don't think the Brownfield statutes would apply here since the property was purchased with the damage already done (even though the buyer was not aware at the time). JAD your answer seems to suggest that the improvements to land are not depreciable?
|
JAD (talk|edits) said:
| 2 October 2007
|
| True, it does suggest that, and that is not correct. Irrigation, fences, etc are depreciable. But if what you are doing is simply cleaning up a toxic mess in the soil, I'm not sure how you would justify taking the position that you had created an asset with a determinable useful life.
|
To join in on this discussion, you must first
log in.
