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Daycare and Taxes>Deducting Required Home Improvements
Rainbow 08:17 PM 06-05-2013
Hi. I'm starting up a home daycare. I am required by licensing to make a few home improvements first. Can I deduct these 100% or only a percentage?
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Mister Sir Husband 09:55 PM 06-05-2013
I'm kind of curious about this as well. Even if I count my labor as free, by the time I'm done getting ready to open I will have probably spend around two thousand on the property (inside and out)
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Familycare71 07:56 AM 06-06-2013
Great question!!!
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TomCopeland 08:30 AM 06-06-2013
Originally Posted by Rainbow:
Hi. I'm starting up a home daycare. I am required by licensing to make a few home improvements first. Can I deduct these 100% or only a percentage?
Great question. There is no clear IRS rule on this point. The assertive answer would be to deduct 100% of the cost. The conservative answer would be to deduct your time-space % of the cost. If it's an egress window I'd deduct 100% of the cost because it's not something a family would normally use. If it's something that is primarily used for your business I would be more likely to deduct 100%.

In all cases, a home improvement must be depreciated over 39 years. A land improvement (fence, driveway, patio) is depreciated over 15 years and is eligible for the 50% bonus depreciation rule.
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CrackerJacks 10:20 PM 06-06-2013
Is the replacement of a toilet a home improvement?
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TomCopeland 08:52 AM 06-07-2013
Originally Posted by CrackerJacks:
Is the replacement of a toilet a home improvement?
By itself, I'd say it was a repair. If it's part of a remodeling of a bathroom, it's an improvement.
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CrackerJacks 08:03 PM 06-10-2013
Tom- we rent a home that is owned by a family member. We pay for Any improvements that are made. We were thinking of remodeling the kitchen. Does the same depreciation rule apply for people who rent and do not own?
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TomCopeland 10:33 AM 06-11-2013
Originally Posted by CrackerJacks:
Tom- we rent a home that is owned by a family member. We pay for Any improvements that are made. We were thinking of remodeling the kitchen. Does the same depreciation rule apply for people who rent and do not own?
Because you are in a residential rental property you can depreciate your home improvement over 27.5 years, instead of 39 years.
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EdwardLBrooks 02:34 AM 07-22-2013
Rental property you can depreciate your home improvement over 27.5 years?Can we do so?I have many question about this,can we do the modeling of only bathroom?
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TomCopeland 08:03 AM 07-22-2013
By rental property I mean you are renting it out to someone else. In this case, if you make a home improvement (remodel a bathroom) you would depreciate it over 27.5 years. If you own the property and are renting it from someone else, you would depreciate a home improvement over 39 years.
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Max 10:32 PM 01-02-2017
Originally Posted by TomCopeland:
Great question. There is no clear IRS rule on this point. The assertive answer would be to deduct 100% of the cost. The conservative answer would be to deduct your time-space % of the cost. If it's an egress window I'd deduct 100% of the cost because it's not something a family would normally use. If it's something that is primarily used for your business I would be more likely to deduct 100%.

In all cases, a home improvement must be depreciated over 39 years. A land improvement (fence, driveway, patio) is depreciated over 15 years and is eligible for the 50% bonus depreciation rule.
Hi Tom! Ran across this old thread when looking for more info on this.

Would it make sense (CYA if audited by the IRS) to ask my licensor for a written statement if I want to take an assertive approach and deduct 100% of a home improvement needed/done just for daycare? I read an article of yours that referred to getting a written statement from your licensor for a fence if licensing required you to have one (and then you can deduct 100% of the cost).

I have hot water baseboard heater covers that need to be replaced. I say need because I'm fairly certain my licensor will require this as a safety precaution and I can see why (old covers have 1.5" gap to the fins that radiate heat and new ones would have small perforated holes enclosing the heating element). They'll run about ~$900-$1400 just for the main daycare areas (not the whole home).

I'm wondering if I should get a written statement from my licensor before purchasing the new covers. Also, if the $2500 rule is extended to 2017, I could deduct this expense in one year, right?

Thanks in advance for any help!!
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TomCopeland 11:35 AM 01-03-2017
Originally Posted by Max:
Hi Tom! Ran across this old thread when looking for more info on this.

Would it make sense (CYA if audited by the IRS) to ask my licensor for a written statement if I want to take an assertive approach and deduct 100% of a home improvement needed/done just for daycare? I read an article of yours that referred to getting a written statement from your licensor for a fence if licensing required you to have one (and then you can deduct 100% of the cost).

I have hot water baseboard heater covers that need to be replaced. I say need because I'm fairly certain my licensor will require this as a safety precaution and I can see why (old covers have 1.5" gap to the fins that radiate heat and new ones would have small perforated holes enclosing the heating element). They'll run about ~$900-$1400 just for the main daycare areas (not the whole home).

I'm wondering if I should get a written statement from my licensor before purchasing the new covers. Also, if the $2500 rule is extended to 2017, I could deduct this expense in one year, right?

Thanks in advance for any help!!
Yes, get a statement from your licensor, then deduct 100% of the cost. The $2,500 rule is permanent.
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Max 05:39 PM 01-03-2017
Originally Posted by TomCopeland:
Yes, get a statement from your licensor, then deduct 100% of the cost. The $2,500 rule is permanent.
Thank you Tom!!
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