I had a long cleanup process of a rental unit in 2016 after some tenants moved out having been there for at least 3 or 4 years (I owned it for their last two years of tenancy). I did a lot of the work myself and as a consequence I have a huge envelope of receipts and a spreadsheet that has the materials/tools purchases as well as the few times I hired out help.
I'd still consider myself "new" to filing taxes as a landlord so something I hadn't thought about much til lately was distinguishing between repairs and improvements. For one off jobs, maybe that's easier. However I think the line blurred a bit, especially when considering my initial objectives differing from the finished project.
I wanted to gauge opinions on some of the projects that I undertook to see how others would classify them if they were in my shoes:
1. refinished wood floor in one bedroom as well as a flight of stairs - <$400 in materials/tool rentals
2. installed ducting for bathroom and stove since not previously existing (bathroom previously was vented to ceiling space between 1st and 2nd floor) ~$150 in materials
3. shower was falling apart due to being tiled on top of sheetrock that had become water damaged and tub wasn't even attached to the wall anymore - ended up reorienting tub since the necessary demo was extensive. Additionally, sub flooring in half the bathroom was rotted, so flooring had to come up. Retiled the shower, and put vinyl planking down in the bathroom. I hired out the install of tileboard, tile, and flooring. - ~$2200 in material and labor
4. With the bathroom subfloor being addressed, noted that the sewer lines were undersized, in two locations pipe joints were loose/broken, and had alternating mix of pvc/abs as well as being severely undervented. Corrected this, hired plumber. $1100 material & labor
5. replaced tub, shower faucet, tub drain, toilet since I had to pull all fixtures out to demo out the rot anyway $300 in materials (ebay and thrift store for all but the toilet)
6. Sanded, stained, replaced hardware on existing kitchen cabinets ~$100 in materials
7. replaced existing countertop as it was water damaged around the sink and delaminated throughout (w/ in kind formica countertop) ~$450 in material
8. hired electrician to correct several "spiderwebs" as well as install designated line for refrigerator since the whole kitchen was previously on one circuit - $800 in labor
9. replaced porch railing after historical district cited me for existing railing as being "historically inappropriate." Hired welder to replace. New railing is definitely nicer, old one was painted hollow aluminum, new one is solid metal $1125 material and labor
On projects where it's a judgement call am I correct in assuming that it's more advantageous (or just simpler going forward) to classify as a "repair" instead of an "improvement" or does that depend on my personal tax situation? I intend to hold this property for at least 5 more years but likely no more than 10yrs at this point, and I'm in the 15% tax bracket. Thanks for any comments on classifying this work properly for tax purposes.