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should i deduct or capitalize the cost to replace a water heater in my rental property? (details below)
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if you're repairing an existing appliance - its an expense. if you're replacing an existing appliance with a new one - that's disposing of one capital asset and putting in service another. you depreciate the new one and you dispose of the old one (if not fully depreciated - talk to your tax adviser how to handle the remaining value). the additional costs of the fixes that are not related to the installation of the new appliance are regular maintenance expenses, so you have to get an itemized invoice from the plumber to know what to expense and what to capitalize.
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