Tax-favored repairs increase net worth.
Tax-impaired improvements decrease net worth.
The fix-up you can label as a repair could be 271 percent more valuable than an improvement, as explained in the article titled “Tax Saving Tips: Repairs Put Cash in Your Pocket.”
Since we are talking real money here, if you own your business office or rental real estate, you need to know what a repair is and what an improvement is.
New IRS Audit Guide
On November 12, 2010, the IRS released its latest audit technique guide on this subject, titled Capitalization v Repairs.
The audit guide confirms the continued existence of the gray area in classifying a fix-up as either a repair or an improvement. Usually, we hate gray areas and do ... Log in to view full article.