Repairs & Capital Expenditures

Honey, the roof is leaking. Can we still get a new kitchen?

Analyzing the differences between capital expenses and repairs and maintenance

I made a very big mistake early on in my investment career by spending money on the wrong items for my property. The difference between capital expenses and renovation expenses is about as clear as mud however there are some distinct differences.

Capital expenses are expenses incurred that are added to the cost base, and not tax deductible. For example, installing an in-ground pool at your rental property would be considered a “capital upgrade” and not eligible to be included as a deductible expense come tax time.

On the other hand, replacing the roof would be considered tax deductible and not a capital upgrade.

The effects to your overall tax liability can be staggering so expert advice and experience is required before spending any major money on your investment property.

If you ever have any questions about capital or renovation expenses, any at all, please don’t be shy. Give me a call or send me a text or email. I am always willing to chat real estate over a cold beer or strong coffee.

Brock Frost