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Sunday, April 16, 2006

MOLD REMOVAL COSTS ARE CURRENTLY DEDUCTIBLE

Generally, expenses are capitalized if they are made to place property in an ordinarily efficient operating condition (as in the case of expenses to remedy a condition that existed when the property was acquired), or if they add to a property's value, substantially prolong its useful life, or adapt it to a new or different use. From an income tax standpoint, most taxpayers would rather have a current ordinary and necessary expense and not a capitalized expense. A current expense can be used to generate an immediate income tax deduction - a capitalized expense gets added to the tax basis of an asset and provides a tax benefit only by depreciation or amortization deductions over time or as reduced gain on sale.

The IRS and some courts have treated the costs of removing asbestos from a building as a capital expenditure because it results in an improvement in the property by reducing or eliminating human health risks. With enhanced concerns about the negative health aspects of mold, in recent years mold removal has increased. Since asbestos removal and mold removal seem to share many common attributes and purposes, there has been a concern that mold removal costs would be treated by the IRS in the same manner as asbestos removal costs - that is, as capital expenses.

In a favorable private letter ruling, the IRS has issued a private letter ruling that mold removal costs by a building owner who leased out the building was not a capital expenses, but a currently deductible ordinary and necessary business expense. In the ruling, the IRS noted that the removal project did not structurally alter the building or adapt it to a new or different use - so remediation actions that do involve structural alterations or adaption to a new use may end up with capitalized expenses. PLR 200607003.

10 comments:

joe sweet said...

Any thoughts on mold remediation costs incurred by a taxpayer with respect to her personal residence?

If currently deductible, does it come under medical, casualty loss, miscellaneous itemized, or none of the above?

Steve said...

Most home insurers will cover the cost of the mold removal. But you need to check with the home insurers to make sure.

Home Inspector Tampa FL

mold and mildew removal said...

Really, is this a bad thing. I don't care how much it cost as long at it can resolve mold problems.

NYCmoldRemoval said...

Deducted tax have made this procedure affordable. You can now think of some successive mold removal sessions in your home can help you out with mold invasion.

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Anonymous said...

Mold removal costs are deductible to make the process affordable. Otherwise there might be some hazardous effects on mold removal sessions at home.

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NYCmoldRemoval said...

One of the many reasons why some Los Angeles homeowners choose to not have their homes undergo a Los Angeles mold removal project is because many are misinformed. It is time that those misconceptions got cleared up.

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Anonymous said...

The proper black mold removal method to handling water damage mold is a straight forward process. Yet, the effort required to conduct the procedure can be extensive and laborious to say the least.

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Michael said...

Very nice!! there is so much information on this blog keep posting good information like this so that I can come back every day for some new info...
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PuroClean said...

That's great news - mold removal work being tax deductible. What about water damage resulting from a pre-existing issue - for example a roof leak that was there when you move in?

teamdwms said...

Your insurance company can help you with paying for the mold removal company to come in and remove the mold from your home. Maybe it would be wise to take pictures of the mold problem and make a claim with your home owners insurance company. IF you are renting a home with mold, they must have someone come out to clean it up. It is unsafe for the family living in that home and they are not allowed to rent an unsafe home.

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