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Article Date:
July 2006

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Making Mold Removal a Repair and Not a Capital Expenditure

Tax law grants an immediate deduction for repairs, but requires that you capitalize and depreciate improvements and betterments.


For tax purposes, the financial difference between a repair and a capital expenditure is huge. You deduct the repair immediately, which puts tax money in your pocket immediately.


Unlike the immediate repair deduction, the capital expenditure on a business building does damage to your cash in two ways:



You get your write-offs on a straight-line basis over 39 years (think time value of money here).


To the extent of gain on sale, you pay a depreciation recapture tax of up to 25% on the depreciation deductions you claimed (here, think in terms of a loan that ... Log in to view full article.

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