Financial Glossary
Repairs and Maintenance (Schedule C)
Repairs and maintenance is a deductible expense line on Schedule C used by sole proprietors to report the cost of keeping business property in ordinary working condition. It covers incidental fixes that do not materially add value or extend an asset's life, such as patching, servicing, or routine upkeep. Costs that improve, restore, or substantially extend an asset must instead be capitalized and depreciated rather than expensed.
Problem & Application
For STR hosts and campground operators, the line between a deductible repair and a capitalized improvement is a frequent and high-stakes judgment call. Fixing a broken HVAC unit is typically a repair, while replacing the entire system may need to be capitalized. Getting this classification right affects the current-year deduction, the audit trail, and how your fixed-asset records are kept.
In Short
Properly categorizing repairs versus improvements on Schedule C protects your deductions and keeps your books defensible.