In apartment management, large-scale repairs are an essential investment for maintaining asset value. Because the costs can be substantial, owners need both tax planning through depreciation and a disciplined funding plan. This article clearly explains typical repair costs, the right timing, and how depreciation works for large-scale repairs.
Why are apartment repairs necessary?
If repairs are neglected, the following risks become more likely.
- Lower durability and safety：Deterioration in structural components can also create problems with earthquake resistance
- Higher vacancy risk：If the exterior and equipment remain outdated, it becomes harder to attract tenants
- Tenant issues：Complaints increase because of equipment failures and defects
- Declining asset value：Negative impact on sale price and rental income
Three types of repairs
| Type | Details | Typical cost range |
|---|---|---|
| Restoration to original condition | Interior repair work after move-out | Tens of thousands to hundreds of thousands of yen |
| Minor repairs | Equipment repairs, termite inspections, and similar work | Several thousand to several tens of thousands of yen |
| Large-scale repairs | Major work such as exterior walls, piping, and waterproofing | Several million yen and up |
How much do large-scale repairs cost?
Typical costs by work category are as follows.
| Work item | Typical cost range | Cycle |
|---|---|---|
| Roof painting | 2,000〜3,000 yen/m² | 10〜15 years |
| Roof waterproofing (flat roof) | 8,000〜10,000 yen/m² | 10〜15 years |
| Exterior wall painting | 20,000 yen and up/m² | 10〜15 years |
| Drainpipe cleaning | 50,000〜100,000 yen (10 units) | 5〜10 years |
| Drainpipe replacement | 3 million yen or more | 25〜30 years |
| Air conditioner replacement | 50,000〜100,000 yen/unit | 10〜15 years |
| Gas pipe replacement | 500,000〜1,000,000 yen | 15〜30 years |
| Metal surface painting | Around 5,000 yen/m² | 5 years |
When should large-scale repairs be carried out?
A practical benchmark is every 10 to 15 years. This is based on the service life of roof coatings, which is generally 10 to 15 years. After 30 years, water supply and drainage pipes may also need replacement, so it is important to understand the replacement timing for each system and build a realistic repair plan.
How should you prepare funding for large-scale repairs?
Monthly reserves
The basic approach is to set aside part of the rental income every month. Savings products offered by insurance companies can also be used.
Using a renovation loan
The borrowing limit is often around 5 million yen, but with collateral it may be possible to borrow more than 10 million yen. Use this option only after putting a repayment plan in place.
Can large-scale repair costs be depreciated?
If the work qualifies as a capital expenditure, it can be depreciated. Whether it should be treated as a repair expense or a capital expenditure depends on the nature of the work.
The difference between capital expenditures and repair expenses
| Category | Characteristics | Accounting treatment |
|---|---|---|
| Capital expenditure | Work that improves value or durability, such as seismic reinforcement or waterproofing | Recorded in installments over the useful life |
| Repair expense | Work intended to restore original condition or maintain the property | Recorded in full in the same year |
Because large-scale repairs often cost 800,000 to 1,000,000 yen or more per unit, they are generally recorded as capital expenditures.
Three benefits of depreciation
- Equipment investments can be treated as expenses：This can reduce corporate tax and create a tax-saving effect
- Building management becomes easier：Understanding useful lives helps schedule work at the right time
- Lower corporate tax burden：Recording expenses reduces taxable income in the income × tax rate calculation
Drawbacks and points to note with depreciation
- Cash flow timing mismatch：A lump-sum payment combined with installment-based accounting can affect cash flow
- Accounting complexity：Tax law changes require ongoing attention. If you are unsure, consult a tax accountant
- Special rule for small depreciable assets：Fixed assets priced from 100,000 yen to under 300,000 yen may be fully expensed, subject to a 3 million yen annual cap
Frequently Asked Questions (FAQ)
Q. How much do large-scale repairs cost?
It depends on the scope of work, but a typical range is 800,000 to 1,000,000 yen per unit, and several million to more than 10 million yen for the entire building.
Q. How often are large-scale repairs needed?
A practical benchmark is every 10 to 15 years. Build your plan around the service life of roof and exterior wall coatings.
Q. Is exterior wall painting a capital expenditure or a repair expense?
Repainting with equivalent materials is generally treated as a repair expense, while an upgrade in quality is generally treated as a capital expenditure.
