Update On IRS Repair Regulations

  • Starting January 1st, 2016 the IRS is introducing new rules in regards to how repairs and maintenance expenses are deducted on your business tax return. Below is an explanation of the biggest changes and how they might impact you and your business’s tax return.

    The Big Changes
    1. With the rules come new ways for the IRS to define what is considered a current year expense or a capital expenditure. A capital expenditure, under IRS rules, would have to be depreciated over the mandate life of the asset. For many leasehold improvement repairs this can be up to 39 years.
    2. The IRS is also increasing the amount you can deduct in the current year under a de minimis safe harbor election from $500 to $2,500. This gives business owners more freedom to make leasehold improvements and deduct the related expenses in the current year.
    There were many other updates to the Internal Revenue Code regarding the final tangible property regulations. Most had to do with better defining whether certain costs are currently deductible or must be capitalized. Other areas of change were the simplification of some of the elections used to claim the current year deductions. While all of this can seem confusing a very informative FAQ on these updates can be found directly through the IRS website here. You can also contact us here at the office with any questions that you might have.

    July 19th, 2016 | Edward Chandler | No Comments | Tags: , , , , , ,

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