Can you please explain what improvements are immediately deductible and kind of improvements have to be capitalized and depreciated?

Thanks.

Dear Dwhite,

The IRS states that expenditures for improvements that are truly repairs and do not result in major structural changes to the rental property can be expensed on Schedule E, immediately in the year incurred.

Examples include painting, new carpets, fixing the screen doors, new windows, broken doors etc are treated as repairs.

Whereas, the expenses that result in major structural changes such as a new roof, basement finish, major improvements to the deck, a new pool etc have to be capitalized and depreciated over 39.5 years!

Remember Dishwasher replacements. Washer/Dryer are treated as capital expenditures are also capitalized!