IRS Material: Repairs and Maintenance

Repairs. The cost of repairing or improving property used in your trade or business is either a deductible or capital expense. You can deduct expenses to keep your property in a normal efficient operating condition. But you must capitalize expenses that add to the value of your property or significantly increase its life. Although you cannot deduct capital expenditures as current expenses, you can usually deduct them over a period of time as depreciation.

TaxTip

Repairs neither add to the value or usefulness of property nor appreciably lengthen its life. They merely maintain the property in a normal efficient operating condition. The cost of repairs includes the costs of labor, supplies, and certain other items. You cannot deduct the value of your own labor.

Examples of repairs include:

òPatching and repairing floors. òRepainting the inside and outside of a building. òRepairing roofs and gutters. òMending leaks.

You cannot deduct the cost of repairs that you added to the cost of goods sold as a separate business expense.