Hello again to the Mold Pros blog and this month we are going to talk ways of mitigating some of the cost of remediation. Tax Deductions. Taxes, that dreaded thing that we in the United States do every April. Since it is April, I thought we could discuss a way that we can help offset some of the money that is spent on a remediation. Most remediations are necessary projects that have to be performed to improve the health of the inhabitants and to prevent future problems. However, no matter how much we try to keep it affordable, it is still an expense. I am writing this to help people utilize the money they are spending. Now (and this is important) I am NOT a tax expert. Please double and maybe triple check everything before you use this information. Tax laws are different in each state and changes from year to year. Here are four rules to think about when planning your project and talking to your tax expert.
Rule 1: Discover and Remove the Mold After You Own and Use the Building
If you are getting ready to sell your home or building and you remove the mold so you can get someone to buy it, then you have a capital expenditure which is not deductible. If you buy a building with mold and remove the mold to get it ready to use or rent you also have a capital expenditure. Clues for this part are:
· Purchase a building without mold
· Discover the mold while you are using the building
· Remove the mold while you continue to use the building
Which leads us to the next rule:
Rule 2: Continue to Use the Building while removing the Mold
This is really a gray area but it is really focusing on where you are doing repair or making improvements. Obviously removing the mold is an improvement to most people, but with tax rules it depends if you are restoring the building to the condition when it didn’t have any mold.
Rule 3: Restore to the Same Physical Condition before Mold
This is taken from the tax code section 1.162-4 which has three rules on deductible repair: 1.Keeps the property in ordinary efficient operating condition 2. Does not materially add to the value of the property 3. Does not appreciably prolong the property’s life.
This part is helped by reusing items in the home such as sinks, doors, window frames. Since our process focuses less on tear out, then my guess is that our process would fi under these guidelines better.
Rule 4. Avoid complete replacements when possible
This one can be complicated depending on how much mold you have in your home. But in a tax mindset it is better to replace 70% of a wall then the whole wall. The writings on this indicate that replacing the whole roof, wall, staircase would indicate a capital expenditure.
I hope this helps a little. I know that these projects can be stressful both physically, emotionally, and financially. We at The Mold Pros try to make this project easier and more affordable. Our process decreases necessary tear out and we work very hard to “right size” a project so that we aren’t doing work for reasons that aren’t helping you or your family