7767. Is the cost of demolishing a structure deductible?Nuco Employeercline202014-07-14T17:37:00Z2014-07-14T17:37:00Z22781587Summit Business Media133186214Site Map/Investments/Real Estate/DemolitionTaxFactsDefaultArticle122611231-00-tf2.xml1231.00;#1929;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 2Is the cost of demolishing a structure deductible?23900.0000000000TaxFactsDefaultArticleSBMEDIA\moss-admin2010-01-14T22:34:06Z7767. Is the cost of demolishing a structure deductible?No. The cost to the owner or lessee of demolishing a structure (or any loss sustained on account of the demolition) must be capitalized and added to the tax basis in the land; thus, the cost is also not recoverable through depreciation.IRC Sec. 280B. However, a casualty loss may be allowed if it occurs before the demolition.Notice 90-21, 1990-1 CB 332. Similarly, a loss may be allowed for the abnormal retirement of a structure due to the unexpected and extraordinary obsolescence of the structure where the loss occurs prior to the demolition.De Cou v. Comm., 103 TC 80 (1994).A modification of a building, other than a certified historical structure (see Q 7758), is not treated as a demolition under IRC Section 280B if (1) 75 percent or more of the existing external walls of the building are retained in place as external or internal walls, and (2) 75 percent or more of the existing internal structural framework is retained in place. A modification of a certified historical structure (see Q 7758) is not treated as a demolition under IRC Section 280B if (1) the modification is part of a certified rehabilitation (see Q 7758); (2) 75% or more of the existing external walls of the building are retained in place as external or internal walls; and (3) 75 percent or more of the existing internal structural framework is retained in place. Such costs may generally be expensed or capitalized and added to the tax basis of the building (and thus depreciated) as appropriate (See Q 7741).Rev. Proc. 95-27, 1995-1 CB 704.