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Repair Expense Deduction Rules

By Matthew S. Abrams, CPA

02-05-21

Repair deductions are often claimed on rental properties or office in home deductions.  However, repairs that replace a component of a property with something new is not deductible as a repair expense but must be added to the cost of the property and depreciated over time.  A common example is replacing a roof on a building with a new roof.  On the other hand, repairing a leak in a roof is deductible as a repair.

Other building components that are replaced are not considered repairs are anything structural or something that cannot be removed without damaging the building.  Walls, doors, windows, floors, electrical and plumbing are all considered part of the building structure, and if replaced cannot be deducted as a repair and must be added to the cost of the building.  Replacing carpeting, linoleum floors, appliances, cabinets and fixtures are also added to the cost of the building but can often be expensed under special depreciation rules. 

When remodeling or renovating a building it is important to categorize the costs by these categories and not by the part of the building being repaired.  E.g., a kitchen remodeling has components that are both structural that will be deducted (depreciated) over 27.5 to 39 years, but also includes appliances and fixtures that are added to the cost of the building but can often be expensed in one year.