Title: Deducting Improvements vs. Repairs on Your Taxes
Headings: Deducting Improvements vs. Repairs on Your Taxes
Deducting Improvements vs. Repairs on Your Taxes
Definitions and Differences
Definition of a Capital Improvement
Examples of Improvements:
Definition of a Repair
Examples of Repairs:
How to Deduct Improvements on Your Taxes
Example of How to Deduct an Improvement
How to Deduct Repairs on Your Taxes
Example of How to Deduct a Repair
Improvements vs. Repairs, Which Is Better?

Content: Adding an Addition
Adding Central Air Conditioning
Installing a Security System
Installing Brand New Hardwood Flooring
Replacing an Entire Roof
Replacing All Existing Plumbing
Replacing All Existing Electric
Renovating a Kitchen
Renovating a Bathroom
Replacing All Windows
Adding a Deck
Building an In-ground Pool
Definition of a Repair
A repair is necessary maintenance to keep the property in habitable and working condition. The IRS defines repairs as those that “do not add significant value to the property or extend its life.” When something is repaired, it is generally restored to its previous good condition, not improved upon. Repairs can usually be completed for a reasonable amount of money. Replacements of broken appliances are usually also considered as repairs. Examples of Repairs: Refinishing a Wood Floor
Repainting a Room
Repairing a Roof
Repairing Existing Plumbing
Repairing Existing Appliances
Replacing a Doorknob
Replacing a Window
Replacing a Broken Smoke Detector
Replacing Rotted Floorboards
Replacing Cracked Floor Tiles
Updating Old Appliances
How to Deduct Improvements on Your Taxes
You can deduct improvements made on your property, however you cannot deduct the full value of the improvement in the year the improvement occurred. This is because an improvement adds value to your property for years to come, not just in the current year. Therefore, improvements must be capitalized and depreciated according to a set depreciation schedule (it will be different for each asset). You must divide the cost of the improvement over the useful life of the improvement and then take an annual deduction based on the given year's expense.