Final Repair Regulations - Tangible Property Regulations

The Final Repair Regulations

The IRS issued comprehensive Repair Regulations regarding the deduction and capitalization of expenditures related to tangible property. The regulations are commonly known as the Repair Regulations or the Tangible Property Regulations. The regs are applicable to businesses in all industries that acquire, produce, replace or improve tangible property. Application of the new Repair Regulations requires an in-depth understanding of various tax cases and circumstances that must be met. KBKG is ready to identify and claim your missed deductions and help you conform to the new Repair Regulations. Our experts have been educating tax professionals with seminars and webinar, and helping businesses retroactively claim any missed deductions.

Who can benefit from a Repair Regulations Study?

The Repair Regulations mostly affect real property, and can provide significant benefits even if a cost segregation study has already been performed. IRS procedures allow you to apply these rules retroactively and claim any missed deductions using Form 3115. Correcting these errors is considered an Automatic Change of Accounting Method and does not require amending any returns.

Generally, anyone that has incurred significant costs for renovations to their existing property in the last 15 years is an ideal candidate. The original improvements should be placed in service for at least one year before renovations occur. KBKG recommends a formal study if at least $500,000 or more is spent on renovations.

Significant changes to Rules

Whether building expenditures are capital improvements or repair expenses.
The IRS outlines numerous subjective factors that must be considered when deciding if the building expenditure is an improvement or a repair expense. KBKG engineers will help you determine when it’s appropriate to expense things such as windows, roofs, HVAC, plumbing and electrical based on your unique situation.

Write-off structural components of buildings when retired or demolished.
Structural components of a building include items with a long tax life (generally 39, 27.5 or 15 years) such as lighting, roofs, HVAC systems, interior and exterior walls, etc. The new regulations allow you to assign a value to those items and write them off when replaced.

“Plan of Rehabilitation Doctrine” is now obsolete!
Under the old rules, you had to capitalize any routine repair work that was performed at the same time as other major improvements. If you did not expense repair work done in the past under the old regulations, you are now able to claim those missed deductions without amending tax returns.

Find out if you qualify for additional deductions





Case Study

Green inc capitalized all $4M of “renovation” costs to their building four years ago. KBKG engineers find that $300,000 was used to replace certain windows, asphalt patchwork, painting, roof tiles, some plumbing fixtures and one HVAC unit. KBKG determines all these costs are repair expenses.

Results: Filing Form 3115 and claiming an additional $266,985 of deductions
on current year return.

Partial Disposition Calculator

The KBKG Producer Price Index (PPI) Calculator is designed to make calculations as simple as possible while minimizing unnecessary work. By providing basic data, the calculator provides a PPI adjusted value while considering the condition of the respective component at the time it was acquired (accomplished by considering the component’s normal life, quality, and age).
» PPI Component Disposition Calculator

TPR Package

The KBKG TPR Package is an online, subscription based, self-service package of templates, checklists, and guidelines that CPAs can utilize to implement the Tangible Property Regulations. It was designed with the individual CPA in mind to make this process as practical and simple as possible, while minimizing unnecessary work. » TPR Package

Recent Repair Regulations News

» More Tangible Property Repair Regulations News

Meet the Experts

KBKG experts have years of experience and are published authors and national speakers on tax issues.

Gian Pazzia, CCSP
Principal » Biography

Lester Cook, CCSP, ASA
Director » Biography

John Hanning, CCSP, MBA
Director » Biography

Webinar Education

Updates to the Tangible Property Repair Regulations Webinar
Join us for our complimentary webinar and be among the first to understand the final Tangible Property Repair Regulations. Learn from Gian Pazzia, CCSP, President of ASCSP, shareholder of KBKG, a published author and national speaker on tax issues.

» View available dates and register for the webinar