IRS classification of Maintenance costs

[Brigitte Garrett]

Hi All,

Under the current tax laws is interior painting considered maintenance vs repairs?

What about roof maintenance (replacing a few shingles)?

I would like to have document references to support classifying these two expenses as Maintenance (not repairs) so that I am safely classifying these costs under the Safe Harbor for Routine Maintenance.

Also, it is my understanding that the Safe Harbor rule for Routine Maintenance stands apart form the Safe Harbor Election for Small Taxpayers which is an issue due to the 2% rule.

Safe Harbor Election for Small Taxpayers

The total amount paid during the taxable year for repairs, maintenance, improvements, or similar activities performed on such building property doesn't exceed the lesser of-

• Two percent of the unadjusted basis of the eligible building property; or
• $10,000 (for questions about how to calculate the unadjusted basis, refer to "Figuring the Unadjusted Basis of Your Property" in Publication 946

Safe Harbor for Routine Maintenance

You are not required to capitalize as an improvement, and therefore may deduct, amounts that meet all of the following criteria:

• Amounts paid for recurring activities that you expect to perform;
• As a result of your use of the property in your trade or business;
• To keep the property in its ordinarily efficient operating condition; and
• You reasonably expect, at the time the property is placed in service, to perform the activities:
  • For building structures and building systems, more than once during the 10-year period beginning when placed in service, or
  • For property other than buildings, more than once during the class life of the unit of property.

Thanks in advance for any guidance you can provide.