Repairs vs. Maintenance vs. Capital Expenditures

[Michael E.]

I'm a little confused about the terminology of what is a "Repair" vs. "Maintenance" vs. "Capital Expenditure". CapEx is the easiest to understand for me...big ticket items like roof, water heater, HVAC, new floors etc, but what exactly is a Repair or Maintenance is less clear to me. Are CapEx and Maintenance the same thing? I've heard many people only budget for Repairs and Maintenance and don't use the term CapEx at all.

Would any of the following items fall under Repair or Maintenance, or be separate expense item all together...?

- Cleaning (at tenant turnover)

- New Paint (at tenant turnover)

- New Carpet

- Pest Control

- Lead Paint tests (in Maryland, I think these are required at tenant turnover if the property is built before 1978, unless it is certified as being "lead free")

[Steve Vaughan]

I am not a tax professional, but I have a couple suggestions from years of self-reporting/ filing taxes on my rental property.  Maintenance in general is recurring tasks to 'maintain' the property.  Painting, pest control, gutter cleaning, lawn cutting, sprinkler winterizing, snow removal, etc.  The IRS lumps maintenance and cleaning together.  Cleaning to me is  a separate line item, but combined at tax time with maintenance.

Repairs are unexpected and sometimes partial. Repairing part of a roof in a calendar year? Repair. Replacing the entire roof or flooring or siding? Cap Ex. Sometimes the size of the repair requiures it to be depreciated and therefore a CapEx item.

You will probably want to keep detailed records and have a tax pro file for you at the end of the year. Then you'll know what to do in the future @Michael E.