Are Repairs on Your Rental Property Tax Deductible?

Managing tenants and maintaining upkeep are just two of the many duties that come with owning rental property. But one of the biggest questions landlords have during tax season is this: Are repairs on your rental property tax deductible? The answer can save you serious money, but only if you know the rules.

In this comprehensive guide, we’ll explain everything you need to know about rental property repair deductions, the difference between repairs and improvements, and how to maximize your tax benefits.

Understanding Rental Property Repairs vs. Improvements

It’s important to comprehend the IRS’s (Residential Rental Property) distinction between repairs and improvements before diving into what is deductible. It matters because it determines whether you can deduct the expense in the year you incur it or if you must capitalize and depreciate the cost over time.

What Qualifies as a Repair?

Common examples of tax-deductible repairs on rental property typically include work that:

• Restores the property to its original condition
• Keeps the property in good operating condition
• Does not add significant value or prolong the property’s life

Examples of rental property repairs that count as deductions include:

• Fixing a leaking faucet
• Replacing broken windows
• Painting a room
• Repairing an HVAC unit
• Patching a roof leak
• Replacing a faulty door lock
• Fixing broken tiles in a kitchen or bathroom

Are repairs tax deductible? In most cases, yes—but there are exceptions. We’ll explain more later.

What Qualifies as an Improvement?

On the flip side, improvements must be capitalized and depreciated over several years. Improvements typically include the following:

• Add substantial value to the property
• Extend the property’s useful life
• Adapt the property to new uses

Common examples of improvements that must be capitalized:

• Installing a new roof
• Adding a deck
• Upgrading the electrical system
• Renovating a kitchen
• Converting a garage into a rental unit

Can you write off home improvements on a rental property? Not immediately. Improvements are depreciated over the asset’s life, often 27.5 years for residential rental property.

What Rental Property Repairs Are Tax Deductible?

The good news is that rental property repairs are tax deductible, which can offer immediate financial relief when tax season rolls around.

Here’s a quick list of common deductible repairs:

• Plumbing repairs
• Fixing floors and walls
• Repainting the interior or exterior
• Servicing heating and air conditioning systems
• Replacing broken appliances
• Minor electrical repairs
• Patching roofs (not full replacements)
• Repairing water damage from a burst pipe
• Replacing light fixtures with similar units

Remember, regular maintenance counts too. Routine work to keep your property habitable often falls under deductible repairs—things like fixing a leak or repainting a worn wall.

However, not all repairs on rental property are tax-deductible. If the work adds significant value or extends the life of the property, like a complete kitchen remodel or replacing an entire roof, the IRS may classify it as an improvement. Improvements can’t be deducted in full right away. Instead, they must be capitalized and depreciated over several years.

Rental Property Repair Deductions: How They Work

To benefit from rental property repair deductions, you must:

1. Document everything: Keep detailed receipts and invoices for all work performed.
2. Prove the work was necessary: Repairs should be ordinary and necessary for property upkeep.
3. File correctly: Report deductions on Schedule E (Form 1040) as part of your rental income and expenses.

Can you deduct repairs on a rental property in the same year? Yes—as long as it meets the criteria for a repair (not an improvement), you can deduct it the same year the expense is incurred.

Many landlords also forget to deduct mileage for travel to and from the property for repair coordination—this is another legitimate expense that adds up over time.

Are Home Improvements Tax-Deductible for Rental Property?

While it might be disappointing that you can’t immediately deduct improvements, they’re still valuable for long-term tax benefits.

Are home improvements tax-deductible for rental property? As mentioned previously, improvements must be depreciated over time rather than deducted all at once. Here’s a quick recap of how depreciation works:

• Improvements are added to your property’s basis
• You depreciate the cost over 27.5 years (for residential property)
• Each year, you deduct a portion as a depreciation expense

While you can’t deduct the full cost the year you spend it, depreciation still provides long-term tax benefits. For example, major upgrades like replacing kitchen cabinets or installing a new HVAC system may qualify.

Top 5 Things to Track When Filing Taxes on Rental Repairs

1. Date and purpose of each repair – This helps determine eligibility and timing.
2. Before-and-after photos – These are useful for proving the nature of the work.
3. Invoices and receipts – Essential for accurate deduction amounts.
4. Tenant complaints or maintenance logs – This shows that the repair was necessary.
5. Professional evaluations or contractor notes – Can back up your classification as a repair vs. an improvement.

Another bonus? Save digital copies in cloud storage for easy access at tax time.

Keeping these organized throughout the year makes tax filing faster and lowers your risk of audits.

Common Mistakes Landlords Make When Claiming Deductions

Even experienced landlords can slip up. Here are a few common mistakes to avoid:

• Lumping repairs and improvements together: This could trigger red flags with the IRS.
• Forgetting to track work on vacant properties: You can still deduct if the property is available for rent.
• Missing documentation: Without receipts, your deduction might not hold up.
• Trying to deduct personal-use repairs: Only work on rental property qualifies.
• Not updating depreciation schedules after improvements: This can impact long-term returns.
• Neglecting to consult a tax professional: A missed opportunity for guidance and savings.

Avoiding these mistakes ensures you make the most of your rental property repair tax deductions.

Why Good Property Management Helps Maximize Deductions

What is the best way to ensure your deductions are made correctly? Partner with a professional. A seasoned property management team can help you:

• Oversee routine maintenance
• Distinguish between repairs and improvements
• Keep records that make tax filing easier
• Avoid IRS headaches and missed deductions

If you’re looking for expert help, our Orange County property management team and property management crew in the Inland Empire provide hands-on support for everything from maintenance coordination to financial reporting.

3 FAQs About Repairs and Deductions

1. What’s the easiest way to tell repairs and improvements apart?

Think “restore” vs. “enhance.” Repairs restore something broken to its original state, while improvements enhance or significantly upgrade the property.

2. What if I make a major repair, like replacing part of a roof?

Partial replacements, like patching or replacing a few shingles, count as repairs. Full roof replacements are considered improvements.

3. Can I deduct repairs if the property isn’t currently rented out?

You can only deduct expenses if the property is available for rent, even if it’s vacant. If you’re repairing a personal-use property, those expenses aren’t deductible.

Need Help Managing Repairs and Maximizing Deductions For Your Rental Property? At TrueDoor Property Management, we specialize in helping landlords manage their properties and maximize their financial returns. Managing repairs correctly isn’t just about keeping tenants happy—it’s also about protecting your bottom line.

Looking for more ways to maximize your rental property tax savings? Read our full breakdown on landlord tax deductions to discover even more strategies.

Do you have questions about how repairs and improvements affect your taxes? Contact us today to learn more about how we can help you manage your rental property smarter. Let’s make this year your most profitable one yet.