Repairs vs. Improvements: Maximizing Your Rental Property DeductionsIn this episode of How to Lower Your Tax Bill, host Terrence Hutchins explains the critical differences between repairs and improvements for real estate investors and W-2 filers with rental properties. Understanding how the IRS classifies these expenses can have a significant impact on your tax deductions and long-term financial strategy.What You’ll Learn:Repairs vs. Improvements: Repairs (e.g., patching drywall, fixing leaks) are deductible immediately, while improvements (e.g., new roof, HVAC) must be depreciated over 27.5 years.IRS Safe Harbors:Small Taxpayer Safe Harbor – Deduct up to $10,000 or 2% of property value.Routine Maintenance Safe Harbor – Deduct recurring maintenance costs.De Minimis Safe Harbor – Deduct expenses under $2,500 per item.Partial Disposition Election: Deduct the remaining cost of replaced property components.LaPointe vs. Commissioner (1990) – A real-world case where a taxpayer incorrectly classified renovations as repairs instead of improvements, leading to disallowed deductions and increased tax liability.For more tax-saving strategies, subscribe to How to Lower Your Tax Bill on Spotify or Apple Podcasts. If you have questions, email [email protected], and we’ll address them in a future episode. The key to tax planning is not just reducing your bill—it’s keeping more of what you earn.

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