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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121256  
Subject: Re: New well dug- tax deductible? Date: 7/19/2012 1:09 AM
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Hi all! I live in NJ and recently my well went bad and I had to have another one dug. Total cost was about $5,150 out of pocket. I have an insurance claim in, but don't don't know how that will pan out.

Is this expense tax deductible? I was given, along with the bill, a notice to sign Form ST-8, Certificate of Exempt Capital Improvement. I am not sure what this means.

Thank you so much for your help!


ST-8 is a sales tax exemption form.

At the federal level, there are only two ways that I can see any deductiion. One, as a casualty loss, but the threshold for that is quite high ($100 plus 10% of AGI), and the other, if part of your home was used for business purposes and you could justify claiming the replacement well was a repair and not a capital improvement.

Since NJ generally limits deductions to medical expenses, alimony, and real estate taxes, there is no relief on your state taxes.

Ira
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