For many business owners, the terms “repairs” and “improvements” are interchangeable. But the tax implications differ. If your business completes repairs, you can deduct the costs the year they’re made. Improvements are capital expenditures that generally must be written off over time. Determining whether work constitutes a repair or an improvement can be tricky. The IRS’s tangible property regulations offer some clarity. For example, they provide a safe-harbor rule under which you can currently deduct amounts paid for tangible property if you deduct those amounts for financial accounting purposes or in keeping your books and records, subject to certain dollar limits. Contact us for details.
