Whether you are a landlord or a homeowner, there may be a point in your life where you have to tackle mold, and with tackling this mold, you will need mold remediation.
However, getting mold removed from your home can be agonizingly pricey, so it is advisable to wonder if it is tax-deductible.
Mold remediation qualifies as a repair that needs to be done to protect the investment of your home.
You will incur costs of removing mold from your home, or building, and these costs have the potential to be very high, depending on the size and scale of the infection.
You may have to have a quarter wall, half wall, or even a whole wall removed, sometimes even more.
Then you must consider the costs of the chemical and personal protection equipment that is necessary in order to do the job safely.
However, the costs of this process are tax-deductible as a normal and necessary expensive.
A procedure or action must meet requirements before something can be deducted as a business expensive, it must be ordinary and necessary.
In short, the process must be one that is not uncommon, and it must also be necessary in order to retain the value of your property. Removing mold from a building fits both of these requirements.
A renovation that is to increase the value of a home, or another building cannot be counted as this.
However, the removal of mold is necessary due to the health risks of the workers and anyone else inside the affected area, and this is something that will affect the flow of cash into the business.
The remediation and removal of mold does not add value to a property, and therefore it is fine to count it as tax-deductible at the end of a year, even if it is something like a personal home.
However, if the mold remediation is a part of a renovation plan that includes the entire property then the cost is required to be capitalized instead of deducted from your taxes at the end of the year.
Therefore, summarized, if you are simply having mold removed from your property, business or home then it is tax-deductible. If you are having it removed as part of a greater renovation plan then it is not tax-deductible.
Are mold remediation costs tax-deductible?
Mold remediation costs can be tax-deductible in certain circumstances.
This would mean that it depends on the situation, if you were to remove the mold as part of a greater home improvement project then it is safe to say that this does not count because you are overall, in your efforts, trying to increase the value of your property, businesses or personal.
On the other hand, if you are simply removing the mold due to health concerns than it is possible that you may be able to get a tax deduction in this instance, do to the removal of mold being a health risk and that the removal of mold does not affect the overall value of the building.
So, what exactly is deductible in this instance?
Let’s say you were to hire a professional service to do the mold remediation for you, then the total of what they billed you after the project was completed is what you would write down as your deduction at the end of the year.
So you would get a tax deduction on the entire cost of the project.
Also, any materials that you personally purchase in order to fully complete the repairs will also be tax-deductible.
Overall, the main thing that brings about the tax deduction of mold removal is that it is not a renovation or a restoration but a repair, as mold causes damage.
The key word here is repair, this is what makes it tax-deductible.
Also, if you need to temporarily relocate and any relative expenses that you or your family, or your business may incur during the remediation process might also be tax-deductible.
However, this can vary, and it is not always the case, so it is a good idea to contact whoever prepared your taxes for you and ask them if it may be deductible.
Generally speaking the whole mold remediation process should be tax-deductible, this includes the costs of the physical removal, the costs incurred for the adequate safety procedures of those who are removing it, and any temporary relocation expenses during the course of the remediation process.
However, this is only the case as long as it is not part of a larger renovation of the whole property that is done in order to raise the value of the building, whether it is a home, a business, or otherwise.