@bigbunny101 wrote:
I am confused by your reply. Expenses are deducted and improvements - amortized?
How do you deduct an improvement?
Sorry, I think I was thinking the right thing but wrote the wrong thing, or I read your post wrong. I also didn't realize that one of the intermediate posts was written by someone else.
My thinking is that the IRS will prefer you to classify things as improvements, since, averaged out over all landlords, it will tend to increase their tax collections. However, that does not mean you must take a risk avoidance strategy out of fear—you should feel empowered to take every legal deduction you can prove and that is consistent with the law and with financial principles.
"any big ticket item can be argued into an improvement by the IRS"
I would not go that far. Let's think about the deck, and I will assume that a deck has a 30 year life with proper maintenance. Maintenance includes staining or sealing, to prevent water damage, as well as replacing the occasional nail pop or cracked board. If you need to replace 20-30% of the surface, including some of the joists, the rest of the deck is still original, and you haven't extended its life, you're still going to have to replace it at 30 years. And painting is clearly an expense, repainting the entire house every 10 years between tenants does not become an improvement just because it cost 10x more than repainting 1 room per year.
I've already given my reasons why I think the foundation and AC are improvements but the deck is a repair. It's ultimately up to you to justify your tax treatment if audited.
