Page 7 - NY Cooperator December 2019

COOPERATOR.COM
THE COOPERATOR —
DECEMBER 2019
7
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to its original condition. According to
the IRS, capital improvements have to
last for more than one year and add value
to your home, prolong its life, or adapt it
to new uses.”
The New York State Department of
Taxation expounds further: “A capital im-
provement is any addition or alteration
to real property that meets all three of
the following conditions: It substantially
adds to the value of the real property, or
appreciably prolongs the useful life of
the real property; it becomes part of the
real property or is permanently affixed to
the real property so that removal would
cause material damage to the property or
article itself; it is intended to become a
permanent installation.” So for example,
building a deck, installing a hot water
heater, or installing kitchen cabinets are
all capital improvement projects. Repair-
ing a broken step, replacing the thermo-
stat on a hot water heater, or refinishing
existing cabinets are all examples of tax-
able repair and maintenance work.
Andrew Sgro is an audit manager with
Prager Metis, CPA LLC, an accounting
firm with offices in both New York City
and Long Island. He explains in simple
terms: “The basic difference is whether
the addition is a permanent or structural
improvement and enhances the overall
value of the property. Replacing the re-
frigerator alone is not a capital improve-
ment. Replacing the entire kitchen is.
There has to be a significant amount of
work.”
Sgro also stresses that if you do work
in your apartment, keep records! You
may need them if the IRS ever questions
your capital gains basis. Keep receipts
for everything purchased, and copies of
your contracts with contractors. While
the IRS rarely audits these types of tax
filings, if they do decide to audit you, you
will need proof of what you did and what
it cost. To warrant an audit, Sgro points
out, the taxpayer would have to send up a
red flag. What constitutes a red flag? Ac-
cording to Sgro, “If you paid $500,000 for
the house some time ago and you claimed
you recently put in an additional $1 mil-
lion to upgrade it, the IRS might take a lo
ok.”
n
AJ Sidransky is a writer/reporter for Th e
Cooperator, and is a published novelist.
CAPITAL GAINS...
continued from page 6
Brooklyn, there are enormous lobbies with
nothing at all in them, though they are in
excellent condition. It can feel vacant, emp-
ty, or unfi nished. Th ey can seem hollow.
One can hear echoes sometimes. Oft en this
is a conscious choice on the part of the cor-
poration or association to keep costs down,
especially since there’s no doorman. Frank-
ly, the buyers purchasing at these buildings
are looking for economy, so they’re okay
with this.”
Mayfi eld Marks does point out though lobby, a place where they can wait for their
that ‘curb appeal’ goes a long way in selling Uber to arrive in luxury. Th ose seeking eco-
apartments, and in Manhattan and more nomical living arrangements may opt for
exclusive areas of Brooklyn, well-appointed less opulence. As Sygrove points out, “we
lobbies are an attractive selling point. She design for the board, as the board generally
believes that in those markets, the curb-
appeal of a nice lobby pays off for the unit advised to engage the general population of
owners at sales time.
In the fi nal analysis, the decision to fur-
nish or not to furnish your lobby may well choices.
rest with the character of your building.
Th ose seeking the posh lifestyle of a full-
service building will expect and elegant
makes these decisions, but the board is well
the building before making their choices.”
Clearly, furniture or not, is one of those
n
AJ Sidransky is a writer/reporter for Th e
Cooperator, and is a published novelist.
LOBBY DECOR
continued from page 6