Investor · Leominster, MA · Member since 2013 · 54 posts · 5 votes
In August of 2013 I paid $7,680 for lead abatement. I am eligible for $4,500 lead tax credit through the state of Massachusetts. My question is, do I still claim the 7,680 as a deductible repair expense or do I have to reduce this amount by the 4,500 credit I will receive?
@Steven Hamilton II - given the nature of lead abatement, it could be considered an improvement rather than a repair, and as such the net expenditure would be depreciable rather than deductible. Do you have any data that classifies this as one or the other?
Steve,
I agree with you on it being an improvement to be depreciated.
Investor · Leominster, MA · Member since 2013 · 54 posts · 5 votes
12y
@Brian Ortins there is information on mass.gov, but I can't seem to find the specific information I'm looking for relative to how to deduct the credit from expense deductions properly.
A quick summary of the way the credit works. If you have your property inspected by a licensed lead inspector and their report determines lead is present you have 2 options (assuming you even want or need to delead).. get certified to handle the lead abatement yourself (not the route I took) or hire a licensed deleading contractor (there are also certified lead remodelers and other classifications of people certified to handle deleading). If you have a licensed deleading company do the work you are able to deduct up to 1500 per unit for the cost to delead. Once you have your final lead inspection and get lead certificates, the lead inspector will also provide you with documentation which shows the cost of the deleading. I'll send that to my CPA to claim the State tax credit.
@Brian Ortins there is information on mass.gov, but I can't seem to find the specific information I'm looking for relative to how to deduct the credit from expense deductions properly.
A quick summary of the way the credit works. If you have your property inspected by a licensed lead inspector and their report determines lead is present you have 2 options (assuming you even want or need to delead).. get certified to handle the lead abatement yourself (not the route I took) or hire a licensed deleading contractor (there are also certified lead remodelers and other classifications of people certified to handle deleading). If you have a licensed deleading company do the work you are able to deduct up to 1500 per unit for the cost to delead. Once you have your final lead inspection and get lead certificates, the lead inspector will also provide you with documentation which shows the cost of the deleading. I'll send that to my CPA to claim the State tax credit.
No, you may deduct your cost minus any credits received. That means:7,680-4,500 credit. = 3,180 deductible costs
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
12y
@Steven Hamilton II - given the nature of lead abatement, it could be considered an improvement rather than a repair, and as such the net expenditure would be depreciable rather than deductible. Do you have any data that classifies this as one or the other?
@Steven Hamilton II - given the nature of lead abatement, it could be considered an improvement rather than a repair, and as such the net expenditure would be depreciable rather than deductible. Do you have any data that classifies this as one or the other?
Steve,
I agree with you on it being an improvement to be depreciated.
One other question, after you had it deleaded did you do any demo work on your property? Does that required a special contractor or since it has been deemed deleaded and in full compliance, can you use any contractor for demo work at that point?
Investor · Leominster, MA · Member since 2013 · 54 posts · 5 votes
12y
@Peter Vuong The property has (2) 3 bed units & (1) 1 bed unit. Each unit is eligible for up to $1,500 state tax credit. I received quotes from licensed lead contractors based on a scope of work. The scope of work is pretty easy to produce as it's simply the lead inspection report provided by the licensed lead inspector. Once the work is complete, a re-inspection occurs and a final report generated (hopefully you pass the first time around). If you do pass, you'll get a letter of certification from the lead inspector, which will verify the cost to delead the unit. This amount is what you can claim as a credit.
Once property receives lead certificates, it doesn't necessarily mean the property is FREE of lead. Lead will still likely remain throughout the property. I have a gut feeling that I'd recommend you do the demo as part of the scope of deleading, but without knowing your specific situation it's hard to say. Anyone that works with material that contains lead paint has to have some minimum amount of qualification, which is why I'd suggest demoing as part of your scope to get lead certificates. (talk with the inspector that produced your initial inspection report. They might be willing to talk off the record and give some general guidance on how to most effectively phase your improvements when considering lead).
All this said, there are certain types of lead contractors and different risk levels of lead removal. Check out the link below. Spend an hour reading through the site. If it's your first time, deleading can be a difficult and expensive process to learn so educate yourself beforehand.
Don't hesitate to reach out to me direct if you want me to share some of my experiences or need some direction.
Investor · North Grafton, MA · Member since 2015 · 20 posts · 0 votes
10y
You mentioned in your January post that you were eligible for $1500 per unit credit since you hired someone out to do the de-leading. My partner opted to get certified and do the work himself. Do you know what the difference would be for claiming credits, if any, in this case? Also, since he started the work, the expenses have been minor so far (lead encapsulation paint, metal trim coverings for inside windows, tools to do it, etc.) and rather spread out over several months. Expensing as repairs just seems the right way to go, but not sure. We began work in 2015, but won't get the certificate until 2016, or 2017 at the latest. When we apply for MA $1500 credit, how do I account for the prior years expenses already deducted?
Investor · Leominster, MA · Member since 2013 · 54 posts · 5 votes
10y
There isn't a difference. If he is qualified to do the work, then I believe the credit is still valid. I'm not sure if his labor can be considered an expense though. You'd have to confirm.
Once the work is complete, youlll have your final lead inspection. Once you comply, the lead inspector will provide the lead certificates and documentation showing his estimation of the cost of the deleading, which is what I provided my cpa to claim the credit.