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Updated almost 5 years ago,
Repairs vs. CapEx in Large Renovation - Tax Question
I am working through my 2019 tax return, which is significantly impacted by a $200K renovation of a 12-unit apartment building that I finished late last year. I recognize that repairs are deductible in the year of and capital expenditures must be depreciated over 27.5 years or on an accelerated schedule. Most of the $200K is attributable to capital expenditures: new parking lot, new kitchens and baths, new electrical and plumbing. However, some of the $200K is related to small fixes that one would traditionally call repairs if they were not done at the same time as the big ticket renovation improvements: landscaping revamp, hallway paint and carpet, etc.
For tax purposes, can I identify certain expenses out of the $200K and deduct them in 2019 as repairs? If so, since my contractors provided invoices to me with repairs and capital expenditures alike, how do I determine the proper dollar figure to count as repairs? It would need to be a good faith estimate.