Tax Deductions: Repairs vs Improvements

2 Replies

Hi All!

Earlier this year I purchased a 4-unit property, and I'm currently living in one of the units. Over the past several months, I've invested about $30k into the units. I'm having trouble determining what exactly constitutes as a "repair" and as an "improvement" for tax deduction purposes. Some of the "repairs" just happened to be "improvements," so how would that be deducted? (i.e. the bathroom had severe water damage that posed structural threats, so I gutted it and installed cement board and new tile.) This seems to be a very blurry line. If someone can help explain or point me to a resource that best explains the distinct difference it would be greatly appreciated!

Thank you!

Originally posted by @Chris Perez :

Hi All!

Earlier this year I purchased a 4-unit property, and I'm currently living in one of the units. Over the past several months, I've invested about $30k into the units. I'm having trouble determining what exactly constitutes as a "repair" and as an "improvement" for tax deduction purposes. Some of the "repairs" just happened to be "improvements," so how would that be deducted? (i.e. the bathroom had severe water damage that posed structural threats, so I gutted it and installed cement board and new tile.) This seems to be a very blurry line. If someone can help explain or point me to a resource that best explains the distinct difference it would be greatly appreciated!

Thank you!

 If the other units have not been rented, the most of the work done needs to be capitalized. So it does not matter if it’s a repair or improvement.

Originally posted by @Ashish Acharya :
Originally posted by @Chris Perez:

Hi All!

Earlier this year I purchased a 4-unit property, and I'm currently living in one of the units. Over the past several months, I've invested about $30k into the units. I'm having trouble determining what exactly constitutes as a "repair" and as an "improvement" for tax deduction purposes. Some of the "repairs" just happened to be "improvements," so how would that be deducted? (i.e. the bathroom had severe water damage that posed structural threats, so I gutted it and installed cement board and new tile.) This seems to be a very blurry line. If someone can help explain or point me to a resource that best explains the distinct difference it would be greatly appreciated!

Thank you!

 If the other units have not been rented, the most of the work done needs to be capitalized. So it does not matter if it’s a repair or improvement.

 I inherited tenants with the property. There was a couple months of vacancy, but they are rented again.