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51
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13
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Erin N.
  • Investor
  • Neptune Beach, FL
13
Votes |
51
Posts

CAPEX or repair? Where to draw the line

Erin N.
  • Investor
  • Neptune Beach, FL
Posted

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.

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