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This page last updated on
January 4, 2004

Rental Property Improvements versus Repairs
What Can be Deducted and What Must be Depreciated?

It is often difficult to determine which repairs and improvements you made to rental property qualifies as a current expense, and which must be depreciated.


There is a general rule stating that if the repair merely returns the property to its normal working condition, it is most likely a current expense. Examples of these types of repairs include replacing light fixtures, windowpanes, torn shingles, or other incidental repairs to your property.

Major improvements such as a new roof, siding, a driveway, extensive renovation, or a new addition generally are capitalized and depreciated over the life of the building. Other improvements like new carpeting, furnaces, and air conditioners are also depreciated, but over a shorter time period.


The differences between what may qualify as a repair instead of an improvement were recently narrowed by two tax court decisions.  In both those cases, rental property owners paid for replacement of leaking and damaged roofing which threatened further damage to the building structure if not repaired.  The courts held in both cases that the roof repair was required to prevent further damage and restore the building to its original condition, not to extend the life of the property, so the full cost could be taken as an expense deduction in the year of the repair.  Note that these cases are not considered definitive legal precedent, but can be viewed as indications of how tax court judges are thinking on this issue.  Consult a tax professional for detailed guidance regarding your specific situation.

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