What is the difference between a repair and a capitol improvement on a home?

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What is the difference between a repair and a capitol improvement on a home?

In preparing my home for sale I have painted the basement the interior garage, had the water pump fixed because of the increase in sediment that decreased the water flow etc.Since “he” has to pay 25% for repairs and 50% for capitol improvements everything has become a “repair”. Any advice?

Asked on July 1, 2009 under Real Estate Law, Connecticut

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

I am not admited in Connecticut and there may be local laws, but it is my understanding that the distinction is as follow and can be found in the IRS code: 

Qualifying capital improvements are those that increase your home's value, prolong its life, or adapt it to new uses. For example, qualifying improvements might include adding a new roof, fence, swimming pool, garage, porch, built-in appliances, insulation, heating/cooling systems, landscaping, or more. (Keep in mind that increasing the square footage of your home could trigger a reassessment and higher property taxes, though.)

Work that doesn't qualify for an interest deduction includes repairs such as repainting, plastering, wallpapering, replacing broken or cracked tiles, patching your roof, repairing broken windows, and fixing minor leaks. There could be tax benefits to repair work if you are about to sell your home as well as the qualifying capital improvements.


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