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Those are certainly characteristics of a repair job.
Not only that, but she's only restoring the room to a safe condition to allow it to be in use - which it was before. (Assuming that the house had a safe, non-rotten bathroom floor and walls when she acquired it.)

Now that doesn't mean that an IRS agent wouldn't question the amount if the return is audited. But you have sound arguments on your side. And my guess is this transaction, by itself, wouldn't cause an audit anyway.


Thanks, Bill. The damage did occur over time and she purchased the house a few years ago, so it may be that there was some damage before, and the plumbing was pretty old to begin with. But there were no immediate structural problems or visible plumbing issues at the time of purchase as far as we could tell when we fixed the place up back at time of purchase.

Her total cost ended up being about $7,000 (started out to just fix the floor, then found plumbing leaks which necessitated the walls, fixes to pipes, etc), so it is a pretty large expense, which is one reason she's concerned that it might raise flags. The area that concerns me is where the documentation reads:

“cost of incidental repairs which neither materially add to the value of the property nor appreciably prolong its life, but keep it in an ordinarily efficient operating condition, may be deducted as an expense... repairs in the nature of replacements, to the extent that they arrest deterioration and appreciably prolong the life of the property, shall be capitalized and depreciated”

This bathroom work was prompted by the need to repair flooring to a safe condition, etc, but it does probably have the effect of arresting deterioration of an older home. The home essentially now has a "new bathroom" which although is of the same quality as the previous bathroom, is x years younger so will last x years longer.
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