Asbestos - tax deduction

Discussion in 'Accounting & Tax' started by housechopper2, 12th May, 2018.

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  1. housechopper2

    housechopper2 Well-Known Member

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    If you have a very old bathroom that becomes unusable with asbestos walls, could you renovate it and claim it as immediately tax deductible given the ATO's position on rectifying asbestos issues in houses?
     
  2. Terry_w

    Terry_w Mortgage broker licenced 4 tax/legal advice Business Member

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    Possibly. Special rules for this.
     
  3. Marg4000

    Marg4000 Well-Known Member

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    Hard to see how having asbestos walls can make a bathroom unusable.
    Marg
     
  4. hobartchic

    hobartchic Well-Known Member

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    Crumbling; wouldn't meet code; unable to get builder/ electrician to do work without removal.
     
  5. Joynz

    Joynz Well-Known Member

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    Is the whole bathroom reno deductible in that case, or just the bit that involves removing and replacing the asbestos?
     
  6. TSK

    TSK Well-Known Member

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    Mmmmm.. we purchased a place recently with explicit purpose of rental. Had to rip up tiles in kitchen and walls in bathroom as they were damaged (think big holes in the bathroom and flaking tiles where fridge was) and had asbestos in them (got them tested). How would this expense be treated; and subsequent work to replace walls and fix floor?
     
  7. marmot

    marmot Well-Known Member

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    If you have just purchased the place would the ATO not consider that you has bought the place at a discount because of its damaged state and classify it as an initial repair prior to making it available to rent.
     
    Last edited: 14th May, 2018
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  8. TSK

    TSK Well-Known Member

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    Damn, I thought that might be a chance but thought maybe asbestos removal might be considered outside that condition via some other option.
     
  9. Marg4000

    Marg4000 Well-Known Member

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    Initial repairs are not deductible but can be added to the cost base for future cgt calculations.

    Surely you noticed the damage, holes and poor condition before making your offer to buy?
    Marg
     
  10. TSK

    TSK Well-Known Member

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    Oh we did, No issue there. was more a query if the asbestos removal (vs the repair work after) could be written off immediately rather than the cost base situation; more a nice surprise than anything we were counting on.
     
  11. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    There is a deduction available for asbestos removal. However in the event of a renovation to the bathroom the deduction may or may not be available. A private ruling may be recommended so that penalties are avoided.

    The matter is not straight foward. The issue of identifying the actual deductible limits, substantiation and initial repairs all affect the issue.

    Three questions may need to be addressed
    1. If a renovation is occurring and asbestos removal is a element of the total cost - Could a deduction be allowed for a part of the total cost ?
    2. If the specific cost for asbestos to be removed, a replacement material installed and tipping is not evident on the invoice, does the Commissioner consider any amount is allowable as a deduction ? Otherwise would the Commissioner accept the specific identified cost ?
    3. If the renovation is associated with initial repairs for a recently acquired property would a deduction be allowed ?
     
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  12. TSK

    TSK Well-Known Member

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    Hi Paul,

    Just flicked you an email to follow up on this.

    Regards
    THomas
     
  13. Depreciator

    Depreciator Moderator Staff Member Business Member

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    Can I ask the obvious question? Is this a property you have been renting out?
    If so, and the asbestos has become hazardous - you want the word 'friable' written on the report - you should be able to claim a deduction for the removal of it and possibly replacement with a like material e.g. FC sheet.
     
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