Thursday, November 30, 2017

Schedule E: Repairs vs. Supplies

The difference between Supply and Maintenance Expenses for rental properties

Repairs – include all repairs made to the property that were not considered capital improvements. Expenses here will be small repairs and not the replacement of floors, roofing, etc. You may also include De Minimis Safe Harbor expenses here if they are less than $2,500 and you make the annual election.

Supplies – include the cost of incidental materials and supplies such as paper for printing, small tools, and other small miscellaneous materials that don’t fit into another category.


Questions:

Are expenses such as painting supplies, blinds, lights and cabinetry hardware considered supply expenses or maintenance expenses for rental properties

Recommended Answer

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The items you listed would be considered Maintenance Expenses.  Supplies would be more like cleaning products or rakes.  Supplies would be something that you use but don't leave at the house.

More answers:

Supplies are usually consumable items. Light bulbs you purchased for the rental unit and any cleaning supplies you purchased specifically to clean the rental unit are examples of a Schedule E "Suppllies" expense. In practice, the IRS does not really care whether you claim these things as supplies on your Schedule E or just lump them into your maintenance/cleaning expense on Schedule E.

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