@magiklamp , I know that IRS would definitely like to have as much of the repair / replacement considered as capital improvement -- I think @Carl also has the same position. However , in my rental properties ( had six at one time and now down to zilch ) I treated such repairs as "repairs ", was prepared for a challenge with documentation showing that (a) city required functioning furnace for occupancy cert. ( in Michigan ); (b) there was no change in FMV with this repair and hence did not qualify as "capital improvement " and (c) the replacement was with similar equipment and not an improvement. Never got a challenge. However, in case of adding furnace and A/C to a house where only furnace existed , I did like up with the capital improvement , because it did increase the FMV.
I do understand your position though
pk
