Updated about 8 years ago on . Most recent reply
CAPEX or repair? Where to draw the line
I set aside 8% of gross rents for CAPEX, and I keep that money in a separate account. I recently had 2 major issues with HVAC systems at two of my properties. One cost me approx $1000, the other approx $1500. I'm not sure whether to count these items as capital expenditures or as repairs. I'm not talking about IRS rules here. I'm just on the fence about taking the $2500 out of the CAPEX account or just treating it like a regular repair and taking the money out of rental revenue above and beyond the 8% CAPEX set aside.
One of the items was a blower motor assembly that had to be replaced. The other was an entire section of forced air return that had to be replaced.
TIA for your thoughts.