Re-plumb: Expense or Depreciation?

Question

My rental condo is at a point where I need to replace the water supply lines in the unit.  The existing plumbing are the old polybutylene pipes that become brittle over time (30ish years) and are prone to developing leaks.  The cost to re-plumb the unit is about $4200.  The question is, would that kind of cost get depreciated, or is it possible to claim the entire amount as an expense?  The brand that gets installed would have a 25-year warranty, if that is relevant.  TIA.

Michael Boyer · Answer

Steve,

Marcia is on the right track... simple: a broken length of pipe=repair (write off that year); complete repiping (depreciated over useful life of improvement)...

But, as always, check with actual IRS rules and appropriate professionals.

And the IRS in their helpfulness, offers (not kidding)  a 222 page booklet of regs (the bulletin is online) distinguishing capital improvements (depreciated) from repairs (deductible in the year). Also, I like Fishman's Tax Deduction Guide for Landlords by Nolo  (mentioned more in the tax/law section of BP) as this summarizes most of the relevant IRS regs and rules in a readable way.

Marcia Maynard · Answer

Check with your tax professional. There are newer IRS rules that took effect on January 1, 2014 about this exact topic. From my understanding, this would constitute a capital expense that would need to be depreciated.

Steve Scherrer · Answer

I took another look at IRS Pub 527, Table 2-1 ("MACRS Recovery Periods...").  Sure enough, I missed it the last time I looked at this, but Table 2-1 specifically mentions "waterpipes" as part of the structural components that get depreciated over 27.5 years.