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I have an investment condo and was notify that the building will be undergoing windows replacement (from single to double pane). How do I treat the cost? Will it be tax deductible? Or, is it an addition to the basis of the condo? Does it matter whether rental property or residential property?
The condo unit owners were given their costs, not from the capital fund. The cost was based on the measurement of the windows to the unit, not shares. Being that it is an investment property (currently renting), it would be expense as opposed to addition to basis for residential owners.
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You don't even indicate how the project will be funded, but I presume the building--not individual owners--is footing the bill. Generally, this should be classified as a cap improvement by the building's auditors, who should share with owners every year a total of all such improvements. Each owner--depending on his/her tax situation--is generally entitled to multiply the total building expense by their % ownership & add to their basis, reducing taxes on the eventual sale of their unit.
Auditors & Boards often don't bother to do a thorough job of calculating & reporting capital expenses; some don't do it at all. Summary dismissal/recall seems appropriate in such instance.
Additionally, NYSERDA & other programs might allow/award extra tax credits for major energy-saving initiatives such as you describe; it's worth investigating.
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