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Look, it's real simple. You would have a hard time renting the house as a NON HEATED home. Since you replaced the heating system, it NOT an improvement, it is a CAPITAL EXPENDITURE and needs to be added to the basis of the home; i.e 27.5 years depreciation. I believe the IRS is correct in that a roof is NOT an expense for the current year. It shopuld be depreciated over the normal 27.5 years.

Yup, it's simple. Too bad you have it 180 degrees backwards. If it isn't an improvement, it isn't a capital expenditure, it's a repair.

You may believe the the IRS is correct that a roof is not an expense. Fortunately for savvy taxpayers, the US Tax Court disagrees.

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