Buying a old fibro run down house , are renovations deductible straight away or do I have to rent it

Hi

I’ve made a offer and it’s been accepted for a old fibro house on the Gold Coast region .

It appears to be fibro /asbestos on the external walls , internal walls and even the ceiling as well as the roof.

It will become a IP for a few years until we are financially ready to move into it .

The first job I wanted to do after settlement was get the asbestos guys in and remove the roof and eaves and install a new colour bond roof before I start renting it out .

Would this then be tax deductible or do I need to wait until a renter is actually in there before things become tax deductible ?

Any advice would be greatly appreciated .

 

Yes Tax deductible, but as capital works, not repairs.

 

Might want to consider demolition and a new build (likely tax issues with this strategy, talk to a tax professional). I hope you got a good deal on an older property with so much asbestos.

It's going to be costly to have to call asbestos removal professionals more than once.

 

Thanks for the reply . What if the roof was deemed unsafe would it then be classified as a repair?
And can I change the roof straight after settlement or do I have to get it rented first to prove it’s a IP

 

Hi

Yes a lot of ppl would probably just knock it but I like the character of most 50’s homes so I would like to restore it .

I grew up in house with asbestos fibro external walls was never a problem .

This property is a bit harder though as it’s internal as well making Reno’s pricey and difficult . Will just paint it and keep floor plan the same .

 

I love the character of older homes too. No reason that a new build can't be designed to replicate the old worldy charm minus the downsides of asbestos, old wiring, old plumbing etc. If it was only a little asbestos I'd probably think about renovating but that sounds like a disaster.

 

I believe the key thing you’re asking is if you plan to have this as a rental property but it is not yet tenanted can you claim deductions for major work done. the answer is yes, but the cost need to be added to the capital value of the building and then depreciated over future tax years. You can’t spend $10k on a new roof and write off the full amount in that tax year. If you have had the property tenanted for a period of time, then make expensive repairs these can often be written off in the same year as far as I understand. I am not an tax advisor so DYOR, it is all on the ATO website.

Also read up on what @wylie suggested, sounds like there may be special deduction provisions for asbestos removal.

 

Ok thanks for your advice , we are suppose to sign contracts and pay 0.25% deposit tomorrow so it’s not too late to pull out . My partner and I don’t know what to do actually we are having second thoughts about it all

 

Ok thanks for your replies

 

Look at the facts and trust your gut. Better to be safe than sorry.

 

Not advice. Just my opinion.

 

There are special rules for asbestos, you might be able to write it off immediately

 

No you cant write it off immediately. That write off would typically be available to an existing property where a issue occurs and the removal is a part of other works and (often) between tenancies. The fact you acquire and want to rip it out are the defining issue for an initial repair. IMO In the absence of a binding private ruling you should not claim a deduction.

The ATO views on initial repairs would prevail. The new expense is capital and thus non-deductible as an initial repair. A 2.5% pa write off may be your only recourse.