Can I write off my fence install?

[Nathan Churchill]

Hi, I'm wondering about whether or not I can write-off an expense I had this year. I purchased a property last year and it didn't have a fence, because the previous owners took it down (and to their new house, I assume?). Anyway, it left my property without a fence and I had an agreement with my tenant that I would put up a fence for their dog. My question is, can this fence install be written off as a repair since the previous fence was torn down and removed, or do I have to depreciate it as a capital improvement?

[Eamonn McElroy]

@Aaron K. "I'm not 100% sure on this but my thought would be that especially if you allow pets that it would be a repair because it was necessary to make the place a suitable rental for someone with pets, and you are replacing something that was there before and removed through no action of your own, but for a definite answer I'd talk to a tax expert."

@Nathan Churchill "Thanks for the reply, Mary! Just for my education, what's the reasoning behind this? Is it because I'm replacing a fence that was there. The line is a little hazy to me on this one so I just want to make sure I understand the rationale."

Using this same line of logic you'd be expensing an apartment building that you constructed if you bought a piece of land and the prior building on it was demoed prior to your purchase of the land...  That's not how it works.

We have to examine if this is a betterment, adaption, or restoration to determine capitalization vs expensing (repairs or maintenance).  It's hard to argue this isn't a betterment to the property, thus subject to capitalization.  Also, if you bought the house without a fence did you really have a fence to begin with?

That isn't to say you'll capitalize and depreciate it on your return though...you have potential de minimis safe harbor, 100% bonus depreciation, and various real estate expensing elections available to you.  Best to consult with your CPA/EA.