Crucial Tax Tips for Landlords

Tip #3: Spread Out Repairs

by Sandra Prieto

Time passingIt may be wise to spread out your repairs so they don’t get confused with improvements. Remember that repairs get deducted and improvements are depreciated.

Be careful to make a clear distinction between the two, especially if you prefer to immediately deduct the expense of your repairs.

Certain repairs and improvements may appear to be connected and part of the same overall improvement program.

For example, say you want to sell your rental soon, so you repair the broken floor in the kitchen, and also replace the windows (during the same week). Although the repair and improvement are not connected, the IRS may feel that they are part of the same overall improvement to your property.

Even though you should be able to deduct the cost of your repairs, just be sure to keep two separate bills for the jobs. To safeguard your deductions, you may consider spreading your repairs over time so they are not lumped together as overall improvements.

With this knowledge, you should take the extra precautions. It may save you from audits and headaches in the future.

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