Basis for condo

The deck, maybe, as you paid for a piece of it. The roof sounds more like a repair. Doesn't get added to basis.

Careful: That depends on how the roof was done. There's a Tax Court case from 2003(?) that allowed a new roof to be expensed as a repair (paved over the old roof). However, if the old roof was removed, then it's a replacement and therefore chargable to capital. I assume that your condo ownership gives you a share of rights to the common areas and that the clubhouse is a common area. Remember, if so, you may only add your share of the assessment that went to the improvement, and not other charges.

I stand corrected - A full replacement of a roof is capital improvement. Thanks.

Depends on what you mean by "full replacement." There's another case (which I can find and cite if I really have to) in which the leaky roof was stripped to the bare, naked rafters with new plywood, tar paper, shingles, etc covering the entire structure and the Tax Court said that was a repair.

The key to repair expenditure vs capital expenditure is neither subtle nor new. Does the expendtiture merely restore the structure to its original usefulness (repair) or does it improve the usefulness/extend the life over what either was before the need for the expenditure arose? The cost of fixing a LEAKING roof of a business or rental structure is currently deductible, no matter how extensive the repair process is.

Seems reasonable on one level, but unrealistic. What you're saying is that if the roof completely blows off in a hurricane, putting on a new one will be a repair. I'm not so sure about that.

I vote for repair. If the whole building blows away, probably not.

The building was built in 1990 with a roof likely to last around 30 years, ending in 2020. The roof was blown off in 2010 and a new roof put on, also with a 30-year life expectancy, so now it should last until 2040. Thus, the life was extended from 2020 to 2040, therefore capital.

Seth

The building was built in 1990 with a building lifespan likely to last around 100 years, ending in 2090. The roof was blown off in 2010 and a new roof put on, so the building should continue to last until about 2090. Thus, the life of the building was not extended, therefore repair.

Restoring a property after a casualty is a basis adjustment, not a repair - because the casualty loss adjusted the basis.

There's no doubt that replacing the roof in your example is currently deductible (assuming the building is business or rental use). That isn't even close to being grey area.

What good is a roof when the underlying building is gone?

assuming the taxpayer took a casualty loss, then yes, it would be capital, adjustment to basis.

If not, then it is a repair, for the reasons stated above.

Thanks for the comments. Is there any publication that discusses repair vs replacement of roofs, decks, docks, etc in a condo association for IRS purposes?

What if insurance paid 90% of the cost for replacing the roof? Then does house decrease by 10% of the cost of the original roof, increase by 10% of the cost of the new roof, and taxpayer claims 10% as a casualty loss on Schedule A (maybe not being able to deduct anything if their AGI is very high)?

Good quesion! After all, they'd have to pay for it if it's not on the house.

I called the IRS. The man I spoke to said that any additions to common property (such as a new deck around the clubhouse) in the Condo can not be added to my basis, is this correct? I (and all owners) paid a special assessment to build the deck.