The IRS allows you to deduct maintenance expenses rather than depreciate them.
The Internal Revenue Service allows property owners to deduct certain maintenance and repair expenses on real estate they rent to others. You list qualifying deductions on the Schedule E filed with your Form 1040. However, the IRS differentiates between repair and maintenance expenses and improvements. You must depreciate improvements to recoup the expenses.
Examples of Repair and Maintenance Costs
Repairs, per the IRS definition, neither add to the value of the property nor substantially enhance its life. Painting, replacing a window that has been broken, fixing a leaking pipe or repairing a drain spout or gutter would qualify as a repair. Routine furnace inspections, cleaning the property or floors between tenants and chimney inspections or cleanings are examples of deductible maintenance expenses. You can also deduct such maintenance expenses as having a service mow the lawn while the property is vacant.
Costs to Depreciate as Improvements
If you replace the shingles or tiles on the roof, this is an improvement rather than a repair. So, too, are expenses such as replacing the carpets, appliances or heating and air conditioning systems. Adding a bathroom, deck or patio, enhancing the landscaping and building a retaining wall would also require you to depreciate the costs as improvements.
Rules for Co-Owners
If you only own part of a property, you may only deduct a percentage of the repair and maintenance costs equal to the percentage of the property you own. For example, if you own a half-interest in a rental home and pay $500 to have the property cleaned after a tenant moves, you can deduct only $250 of that expense. The other owner should reimburse you for the remaining amount, which he can then deduct on his taxes.
Renting Vacation Property
If you rent property that you also use for personal accommodations, there are different rules for deducting maintenance and repair costs. Under IRS guidelines, if you live in the home more than 14 days, or if your occupancy exceeds 10 percent of the total time you rent the property, you must prorate expenses. For example, if you live in the home 80 percent of the year, only 20 percent of the expenses are deductible. Unlike property that is strictly rented for profit, you can not deduct more in expenses than you earn in rent.
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