As a landlord, you'll spend money maintaining your property. How you classify that spending—as either a repair or an improvement—has a major impact on your taxes.
Repairs
A repair keeps your property in its normal, good operating condition. It doesn't materially add to the value of the property or prolong its life. Examples include fixing a leaky faucet, patching a hole in the wall, or replacing a broken window pane. Repairs are fully deductible in the year you pay for them.
Improvements
An improvement (or betterment) adds significant value to your property, adapts it to new uses, or substantially prolongs its life. Examples include adding a new bathroom, replacing the entire roof, or installing a new central air conditioning system. Improvements must be capitalized and depreciated over time. This is where cost segregation can again be valuable, as many components of a large improvement project can be identified and depreciated faster.