Hi, welcome all you tax guys and gals. I have one rental property and I am trying to figure out the differences between Cleaning and maintenance, Repairs, and supplies as listed on schedule E. I am looking for examples . I have purchased many items at the local home center such as paint, sandpaper , brushes ,etc… using my own labor. Is this a maintenance category or a repair category. What is the difference? Also I purchased tools such as a caulk gun,sanders, Steam cleaner for carpets, etc… for the use on this rental property. What category would these type of items fall into? Thanks for any input it would be helpful!
Dale
With respect to repairs vs. maintenance, I guess a “repair” would be actually fixing something that is broken or does not operate as it should, whereas “maintenance” is something that you do in order to avoid repairs.
Where does “paint” (and other similar expenses) fall into?
I don’t think it matters. The bottom line is that you’re getting the expense and you have the receipt. Having said that, I am not a CPA.
As for larger items, you will probably want to expense those under Sec. 179 which just means that you are going to write them off in full this year even though they have a service life longer than one year, and therefore would normally be depreciated over their service life.
Thing is, Sec. 179 record-keeping is a pain, especially at the state level, so my previous accountant just said to expense anything under $500 without using Sec. 179, even if it was technically a capital asset.
IRS pub 527 is a good place to start.
Section 179 does not apply to rental property activities.
Thanks guys, Does it really matter what category they are in since it is all taled up in the end as expenses?
nope. it’s all deductible. put it in a bucket and forget about it.
I want to underscore what Dave T says here. He’s right. Sec. 179 applies to active trades or businesses, so you would not use it unless you’re treating your real estate as an active business.