A reader sent the following question …
I just finished reading What You Must Know BEFORE Becoming a Greedy Landlord, which is an excellent resource for potential and current landlords.
My question concerns repairs versus improvements.
If a repair cannot be made and an item must be replaced for safety reasons, does that still count as an improvement?
The item in question is a set of concrete steps that have broken away from the foundation and cannot be repaired. The steps are dangerous and need to be replaced before we can rent the house out.
With the tax code, much depends on how you interpret it.
Here’s what it says regarding repairs:
“You can deduct the cost of repairs that you make to your rental property. A repair keeps your property in good operating condition and does not materially add value to the property. Examples are painting, fixing leaks and replacing broken doors or other parts of the rental property.”
So if I were you, I’d classify your new steps as a repair and deduct the full cost.