Baker Tilly repair and maintenance deduction examples

We have been helping our clients adopt the temporary repair regulations and prepare for the final regulations, including filing accounting method changes in order to comply with the regulations, reducing their taxable income, and saving cash taxes for our clients. The examples below are provided to help you better understand what may be available for your business.

Community bank branches

What was deductible: Minor bank branch remodel costs to keep the location cosmetically "fresh" for customers including masonry patching, replacement doors and locks, repairs to entrances, drywall patching, replacement of acoustical ceiling panels and grid, window replacement, wall repair, painting, patching and leveling floors, certain HVAC, plumbing and electrical work, roof membrane replacement, and parking lot re-surfacing and repairs.

Benefit: Nearly $2 million in current-year tax deductions.

Manufacturer of high-quality ingredients

What was deductible: Costs incurred to keep the manufacturing facilities in normal operating condition, including replacements of roof membranes, replacements of HVAC components, replacement of machinery and equipment components, lighting re-lamping, plumbing repairs, elevator repairs, electrical work, and parking lot re-surfacing.

Benefit: More than $15 million in current-year tax deductions.

Electronic component manufacturer

What was deductible: Replacement of roof membranes, paving re-surfacing and repairs, HVAC work, window replacements, and office renovation costs to update worn office space including repairs to walls, ceiling and flooring, and painting.

Benefit: More than $4.5 million in current-year tax deduction.

Real estate developer that operates commercial, office, retail, and residential apartment building space

What was deductible: Costs incurred to keep the properties regularly maintained in order to keep the space, common areas and land improvements "fresh" for current and future tenants, including replacement of roof shingles and flashing; minor repairs to decking and substructure; replacement of doors and door hardware; replacement of acoustical ceiling tiles; replacement of drywall partitions; interior and exterior painting; replacement and repair of finished and sub flooring; maintenance of storefront; relocation of overhead lighting and other light fixtures; relocation of wiring, re-lamping, and repairs to interior light fixtures; replacement of restroom plumbing fixtures, mirrors, toilet partitions, and restroom accessories; replacement and repairs of water heaters; relocation of building mechanical system components to take into account reconfiguration of space; refurbishment and replacement of parts for building mechanical systems, specifically HVAC units; repair and replacement of elevator components, including mechanical cab, and control components; and resealing, re-striping, and re-paving parking lots.

Benefit: More than $4 million in current-year tax deductions.

Hotel owner, operator, and developer

What was deductible: Minor hotel remodel costs to keep the location cosmetically "fresh" for guests, including replacing existing interior and exterior doors; repairing existing drywall; replacing existing flooring with like flooring; re-painting existing walls; minor repairing of existing HVAC systems; replacing bathroom fixtures; replacing existing building lighting; refurbishing and replacing parts for the electrical system; replacing various components of the existing fire protections system; and sealing, re-paving, and re-striping of parking lots.

Benefit: More than $10.5 million in current-year tax deductions.

Fast food restaurant franchisee

What was deductible: Costs incurred to keep the restaurants "fresh" for customers, including minor roof repairs, replacement of acoustical ceiling tiles, drywall, doors and windows, interior and exterior painting, maintenance of storefront, replacement of minor HVAC components, replacement of restroom plumbing fixtures, and re-sealing, re-striping, and re-paving parking lots.

Benefit: Nearly $500,000 in current-year tax deductions.

Auto dealership

What was deductible: Costs incurred to keep the dealerships "fresh" for customers, including maintenance of storefront, replacement of drywall partitions, reinforcement of exterior masonry architectural elements, interior and exterior painting, replacement of doors and door hardware, relocation of building mechanical system components to take into account reconfiguration of space, and re-sealing, re-striping, and re-paving parking lots.

Benefit: Nearly $100,000 in current-year tax deductions.

If you have any questions regarding whether adopting repair and maintenance would benefit your business, please contact your Baker Tilly advisor or send an e-mail to tax@bakertilly.com.