Deducting a new septic system.

6 Replies

I have a septic system that has failed and needs to be replaced.

Could I deduct this as a repair instead of a improvement, since I have no choice but to replace it?

Not a CPA but my understanding is that it is the same as replacing any other improvement like HVAC system or roof.  You have to depreciate it out. 

Yep, same as a roof.

Originally posted by @Chad S. :

I have a septic system that has failed and needs to be replaced.

Could I deduct this as a repair instead of a improvement, since I have no choice but to replace it?

27.5 year depreciable item. I'm sorry to say that.

ok, I know I'm pushing the line, but I just found out that I don't need to replace the tank. So maybe technically a repair ?

I would say if it is replacing some crushed lateral lines then you are probably good as a repair.  If you are replacing the whole leach field it is getting cloudier.  There is also the new Routine Maintenance safe harbor rules that may come into play. 

@Chad S.  Take a look at the new IRS final regs, specifically the Safe Harbor for Small Taxpayers and as @Paul Ewing  mentioned, the routine maintenance safe harbor. 

The problem that you face is the septic system is now considered a "unit of property" under the new regulations. Replacing pipes will likely be considered material to the septic system as a whole and therefore you will not be able to classify it as a currently deductible repair.

I wrote a blog post on it here. Feel free to give it a read and ask any questions you may have. 

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