Is Water Damage Repair a Capital Improvement?
Any type of work you have done on your home is going to come with a significant cost. Between materials and the cost of labor, these types of projects tend to come with lofty price tags. If you are in search of a little relief from those costs, you might be looking into tax benefits that can be utilized to effectively reduce what you have to spend. As it relates to water damage repair in High Point, you might be thinking about categorizing this work as a capital improvement for tax purposes. But is that correct? Let’s take a closer look.
If you need to hire trusted water damage repair contractors to deal with a flood event in your home, AdvantaClean is the easy choice. We are proud to serve locations in and around High Point, so reach out today to learn more.
A Disappointing Answer
Unfortunately, in most cases, water damage is not going to qualify as a capital improvement. The issue here is the definition of what counts as a capital improvement. For something to be classified as a capital improvement, it needs to improve the condition of the property to enhance its value or extend its life. This lines up with the use of the word “improvement” in the title – the point is to make something better than it was previously.
That’s not what you are doing when you bring in a contractor to perform water damage repair. In this situation, rather than improving the condition of the property, you are simply restoring it to its previous state. The property was degraded as a result of the water damage, so you are making an investment to fix that damage and get it back to where it was before. This is still important work, of course, but it is not a capital improvement.
Consider the Details
It’s possible that you’ll wind up with a project that includes elements of both repair and capital improvement. For example, imagine a situation where your basement is badly damaged by a flood. First, you need to have the water damage repair work performed to restore what has been lost and make the home livable again. That would be classified as maintenance and not as a capital repair.
However, you may then use this situation as an opportunity to go ahead with a capital improvement project that renovates or remodels the basement in a significant way. It’s possible that the spending on that part of the project could be considered a capital improvement, even if the water damage repair didn’t fit that definition. As always, it’s important to talk to a tax professional before making any determinations on these kinds of financial decisions.
While water damage repair isn’t going to count as a capital improvement, it’s still work that needs to be done. To get the work done promptly, correctly, and for a fair price, place a call to AdvantaClean today. We would be proud to serve you!