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Schedule E deduction question

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J&P11

Junior Member
I know that certain expenses on rental property have to be capitalized and not deducted for the year but I have some questions on how to deduct an expense where I purchase materials ($500 of road asphalt) and the labor of repairing pot holes on the rental property is done a no cost because it's done by myself and a friend. Can I just deduct the materials as supplies on the Schedule E tax form? What about the purchase I made of $700 worth of railroad ties and spikes from Tractor Supply and later I hired a contractor company to put them along a low hillside of the property as a sort of a retaining barrier to prevent erosion of a section of the yard by heavy rain. Is that considered an improvement to be capitalized? Would it be both the labor and the supplies or just the labor since I purchased the supplies?
 


Taxing Matters

Overtaxed Member
You can deduct the costs of the material you purchased for repairs and maintenance, but you cannot deduct anything for the labor you did yourself as you didn't pay anything for that. Materials that you buy for capital improvements must generally be capitalized. I'd say pot hole repair falls into the maintenance category and creating a retaining wall is an improvement to the property meant to last a few years and would need to be capitalized. Unfortunately, you cannot direct expense that cost under IRC § 179 if this property is a residential rental property.
 

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