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. 

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here