Rental Expense

[S T]

T/p had a major water leak in Bathroom - No insurance reimbursement involved

Plumber Expense - going to expense as a repair for water leak and repair of plumbing

Question- T/p had to repair/replace sub-floor and lay new vinyl flooring due to water leak (did not upgrade) to ceramic tile, etc - repairs and laid new Vinyl - cost is 1,455 - is this a repair or do I depreciate over 5 years??

Thoughts,

Thanks,

Sandy

[Lion]

I would lean toward repairs, getting back to liveable order. However if you do decide to depreciated the floor, wouldn't it be 27.5 years as part of the house, if a residential rental?

[S T]

Thanks Lion,
Therein is why I am having a conflict - as the subfloor - had to be repaired (owner's words) - apparently only a portion of the water damaged sub-floor was replaced and new vinyl laid as it was damaged and could not be salvaged (obviously had to be removed to get to the sub-floor)

Vinyl flooring can be found throughout facility. Carpet was specially designated as tangible personal property in Rev. Rul. 67-349, 1967-2, C.B. 48. The Senate Finance committee Report, Revenue Act of 1978, (S. Rep. 95-1263, 1978-3, C.B.315, 410-423), provides additional support stating: “floor coverings which are not an integral part of the floor itself such as floor tile generally installed in a manner to be readily removed (that is it is not cemented, mudded, or otherwise permanently affixed to the building floor but, instead, has adhesives applied which are designed to ease its removal)…are considered tangible personal property and not structural components” In Hospital Corporation of America and Subsidiaries v. Commissioner, 109 TC21, (1997), carpeting and vinyl flooring were determined to be tangible personal property. The court concludes: “Carpeting is not an integral part of the floor and satisfies the criteria for tangible personal property outlined in Whiteco Industries, inc. v. Commissioner, 65 TC 664 (1975, acq., 1980-24 I.R.B. p. 5)…Petitioners have shown that they did not intend for the carpeting to be permanently affixed to the underlying floor”, "applying the Whiteco criteria…vinyl floor coverings are not inherently permanent. We are persuaded that the floor coverings were not intended to be, and were not permanent coverings for the buildings’ floor” Accordingly, the vinyl flooring qualifies as Asset Class #57.0 (Distributive Trades and Services) for tax depreciation purposes.

Sandy

[Lion]

So, the vinyl flooring was not easily removed, could not be relaid, but it wasn't permanent?! I guess as long as his new vinyl flooring is not affixed to the floor, then it's 5-year property. Don't think I'd use removeable flooring in a rental; tenants might take it with them... Hope he has good liability insurance for when someone trips over his removeable flooring.

[S T]

No in this case the vinyl was easily removed to get to the sub-floor (plywood, etc) but obviously the vinyl was water damaged as well and could not be salvaged and relaid (water stains etc.

In the cite it says

“floor coverings which are not an integral part of the floor itself such as floor tile generally installed in a manner to be readily removed (that is it is not cemented, mudded, or otherwise permanently affixed to the building floor but, instead, has adhesives applied which are designed to ease its removal)…are considered tangible personal property and not structural components” "applying the Whiteco criteria…vinyl floor coverings are not inherently permanent. We are persuaded that the floor coverings were not intended to be, and were not permanent coverings for the buildings’ floor” Accordingly, the vinyl flooring qualifies as Asset Class #57.0 (Distributive Trades and Services) for tax depreciation purposes.

I have some vinyl flooring in a commercial unit we own (bathroom areas) and we have easily removed for replacement - even though there was some adhesive applied on the original installation.

Haven't decided whether to treat as a Repair Sub-floor (portion) and also the vinyl replace or to try to separate the two costs and treat just the vinyl as a 5 year Floor - Depreciate. Total cost of both is $ 1,425 - but I do not have the breakdown of the sub-floor repair and the Cost of the Vinyl yet.

Thanks,

Sandy

[taxea]

If the water damaged the subfloor as well as the vinyl it is also a repair.