"Stuart Bronstein" <spamtrap[at]lexregia.com> wrote in message
news:Xns9A6845F952E4Davocatstuyahoofr[at]130.133.1.4...
- quote -

Because it's a replacement. That's the first clue, but not conclusive.

Remember the roofing case from the Tax Court in 2002 where the taxpayer
simply paved over the old roof with a new one - and got to EXPENSE it?

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In misc.taxes.moderated, boostm3 wrote:

- quote -

You cannot write off the expense/improvement for your residence,
just as a home owner who adds central air from scratch or who builds
a garage cannot deduct that.

It would only come into play as the basis for capital gains tax upon
sale if the exemption was not sufficient, so the distinction
question is not moot. It is the "writeoff" part that won't happen in
either case.

You would be able to deduct the property taxes that increase with
the value of your property. :-(

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"boostm3" <elliott.paule[at]gmail.com> wrote
- quote -




"write off".......no.


In the case where there is the Condo Assn "pool" of funds for some future
capital improvement, the issue of just exactly what happens with the funds
would be of concern. Say the facts are different, and instead of a one-time
hit of thousands of dollars, they are assessed an extra $50 per month which
goes into the fund for some future, often unknown, major repair or capital
improvement. I would suspect what happens to your share of that fund upon
your sale of your unit would drive how it's treated. If it's refunded to
you, then it's nothing more than an escrow account - no deduction or basis
increase is warranted.


If you lose your escrow, meaning it stays with the Assn for that future
repair/improvement, then it most likely is a basis increase. The buyer
steps into the ownership position with an "ante" in the escrow already paid.


Often times though, the monthly fees cover regular maintenance, common
services (trash, etc), minor repairs to common areas, and the like. Unless
there's a stated amount that is restricted and set aside for this
improvement there's no reason to increases basis even though there is an
increase in cash reserves.

So the facts and circumstances pattern would dictate if the fees paid are
non-deductible personal expenses of maintaining the home, some type of
capital improvement that adds to basis, or a combination of the two.





--
Paul A. Thomas, CPA
Athens, Georgia

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- quote -

If each unit owner were assessed $6000 for his share for a major
garage upgrade, or a cooling tower, whatever, and a portion of that
cost could be written off as a capital improvement, why would that not
be " worthwhile" ? I Didnt say anything about a business here . I
described the setup pretty thoroughly just as it is.. Condominum..
Unit Owners being assessed for capital improvements to the Common
elements of the condominium.. Lets take it as a given that these ARE
capital improvements so that we dont get off into that debate which is
a whole other matter, Im just trying to determine if typical
condominium ownership where the unit owners own their units and pay
common charges monthly to support the Common Elements of the
condominium would be entitled to write off a portion of their share of
the assessment which pays for the capital improvement to the
Condominium.

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In article <sbQEj.23106$r76.6473[at]bignews8.bellsouth.net> ,
"Paul Thomas, CPA" <paulthomascpapc[at]bellsouth.net> wrote:

- quote -

Wait! Wait!

I'm no expert on these issues, but seems to me I've seen lengthy debates
rage in the past on whether major roof repairs/replacements (on a house,
for example) had to be treated as repair costs or capital investments;
and while the endpoint remained murky, there seemed to be some agreement
that putting on a totally new roof (which means, more or less at least,
tearing off the old one) was definitely a capital improvement.

But are you now saying that when you first tear off the old roof (which
may still have a bit of serviceable life in it), you have to reduce the
basis of the house (due to having "removed" it), before you can "stack
on" the cost of the new roof as a new addition to the basis?

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In misc.taxes.moderated, boostm3 wrote:

- quote -

You did not state why it matters to you. If this condo is not a
business, but is just your residence, most people would not find the
distinction to be worthwhile. Maybe you are claiming at least part
of the condo as used exclusively for business.

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In article <Xns9A6845F952E4Davocatstuyahoofr[at]130.133.1.4> ,
Stuart Bronstein <spamtrap[at]lexregia.com> wrote:

- quote -

efficiency, looks better etc) it is an improvement and if it has a
useful life of more than a year than it increases the basis.

In all likelihood a replacement roof, water heater, furnace is better
than the old one. A potential buyer might not specifically pay more for
these things but he would surely use the presence of the old item as a
bargaining chip

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On Mar 21, 9:52 am, Stuart Bronstein <spamt...[at]lexregia.com> wrote:
- quote -

my research:

"The IRS states expenditures that increase the value or longevity of a
home qualify as "capital improvements". Things like a garage, deck or
porch. The list can also include a new roof or heating and cooling
system, insulation, and built-in appliances. Even a fence,
landscaping, swimming pool or addition qualify."

So, in general, a case can be made that any addition or uprgrade that
increases the home's value or longevity could qualify as a capital
improvement. Certainly, then, a 20 yr old Cooling Tower which is on
the verge of failure can be upgraded, and the upgrade would quailify
under the above statement. The upgrade is financed by the unit
owners via an assessment levied. As unit owners, we vote on the
assessment, and if approved by a majority of us unit owners, the
assessment is broken into 3 monthly payments which are added on to our
common charges for those 3 months. Since we are paying for the
cooling tower replacement, I initially thought we unit owners would be
allowed to take this assessment as a capital improvement tax
deduction. But, technically, I think that all we really own is our
own unit. Common elements are paid for by us via monthly common
charges, but not 'owned' by us, I believe.. . I wonder if any
Condo owners have ever been able to make the case that common element
upgrades are deductible as home improvements to each unit owner.

========================================= MODERATOR'S COMMENT:
Please delete all unnecessary material from the prior post when responding.

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"Stuart Bronstein" <spamtrap[at]lexregia.com> wrote
- quote -




I suspect that part of his purchase price could be allocated to the existing
system, and that cost needs to be removed from basis (because the old system
is gone) and then add the cost of the new system. I suspect it's a shell
game for a very few dollars to his advantage. You can't keep stacking new
basis on top of old basis when the old asset is removed.

If there wasn't a water heater and one was installed, then it's a plus
without any minus.

In the case of the OP, there was something he bought, that is being removed
and discarded, so some subtraction to basis should be in order, yes?

Then the replacement item can be added to basis.

The purchase cost of the old unit isn't clear, but there was something -
some value - that could be placed on the existence of a then working unit.
At best, it'd be the amount he would have asked off the purchase price if
when he went to buy, the unit wasn't working or there wasn't one at all. At
worst,. it'd be his share of the cost of the replacement unit.

It starts to sound like a game with no to very little gain.


--
Paul A. Thomas, CPA
Athens, Georgia

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"Paul Thomas, CPA" <paulthomascpapc[at]bellsouth.net> wrote:
- quote -

But adding a hot water heater, for example, in the first place is a
capital expense, isn't it? So why isn't replacing it when it breaks
down also considered a capital expense?

Stu

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"boostm3" <elliott.paule[at]gmail.com> wrote
- quote -





If the expenditure extends the life of the structure.

The building would be too hot, or too cold, or at times, just right - but
the building itself isn't going to last any longer because you fixed or
replaced the heating and air conditioning unit.





--
Paul A. Thomas, CPA
Athens, Georgia

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On Mar 21, 8:33 am, an_ordinary_guy_...[at]hotmail.com (Bill) wrote:
- quote -

line thats drawn to help decide whether a home's upgrade is considered
Maintenance or a Capital Improvement?

========================================= MODERATOR'S COMMENT:
When responding please delete all unnecessary material from the prior post.

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elliott.paule[at]gmail.com (boostm3) posted:

- quote -

Your condo documents will control; however, common sense dictates that
the board undoubtedly had a responsibility to _maintain_ facilities
necessary for habitability -- which would include heating and air
conditioning equipment. Especially in view of the advice the board
received indicating a possible failure of the old, existing equipment,
the board would be guilty of a "failure to maintain" the property, if
they didn't act to replace this.

Therefore, it is not primarily a 'capital improvement' -- but rather a
maintenance expenditure. So the plain answer to your first question is
"No."

I truly don't understand the second question: Of course, based on the
entire condominium concept, you automatically own a share of the common
elements -- but that "ownership" is simply reflected in the value of
your individual unit. There's nothing there to "share" except the value
of your unit -- which would surely decline, if the overall common
elements were not maintained properly.

Bill

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I own a condominium in a hi rise buildg. This summer, the board has
decided the need to levy an assessment on all unit owners to pay for
the purchase of a brand new cooling tower and related equipment.. The
current equipment is old and in such a condition that it has been
advised it be replaced by the summer, otherwise run the real risk of
going hot all summer.

Two questions:

1) would the replacement of said equipment be considered a Capital
Improvement?

2) if so, in the setting of the condominium, since we all own our
units plus a percentage of all 'common elements,, do you think we
would be permitted to claim our share of the capital improvement up to
the percentage of our ownership in common elements?

thanks.

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