Confused about what I can claim for renovations on 1960s house

Very excited to have just brought by 2nd IP, leaving the majority who don't make it past one

I don't know exactly when it was build - I'm guessing 1960s.
I'm going to renovate the bathroom & kitchen before renting it out.

From what I understand these renovations are not tax-deductible but may be claimable as capital works improvements, although I'm unclear with the new rules.

Wondering what I can claim, if anything, depreciation-wise under the new rules in general and in terms of the renovation

 

Depreciation claimable on all the new stuff you put into it. Not on any items you bought included with the house, nor any of the existing house structure itself.

 

1. Initial repairs are not deductible in the manner described
2. Some of the costs may be Div 40 depreciable or Div 43 cap allowances. I would keep records of the work completed and discuss with a quantity surveyor. They will also address whether your Div 40 can be claimed as the process is now more complex than ever before. In any event they can identify the value in the existing structure as prior renos may also have been made.

Depreciator
Washington Brown
BMT

 

Paul has a point. It hasn't been stated yet whether the house was completely unrenovated at purchase. It's quite common that we find existing works in our inspection and searches, like new roofing, hard landscaping, etc., and these will also form part of the claimable capital works allowance. Completely unrenovated properties are becoming rarer and rarer.

But yes, you won't be able to claim existing plant & equipment items. You'll only be able to claim the ones you install, and that's if the place isn't your place of residence while you're performing the works.

 

So if I go to Bunnings and buy paint and paint the walls - the out of pocket expense isn't claimable?

 

Depending upon how you apply it etc (specific circumstances). Are you living there? Is it a touch up or a complete repaint?

 

IP Property... does the use really matter? Touch up vs complete repaint - if it's an expense its an expense. I currently claim all types of expense (batteries / mulch etc).

 

Mulch is soft landscaping and may have no deductibility at all.

@Paul@PFI posted this a while ago Gardening, landscaping and claimable deductions

 

Smells a bit like humus to me.

 

The key first issue is - Is this a newly acquired property ? Or between tenants ?

If newly acquired no costs of readying for tenancy and remedying defects (repairs, maintenance) may be deductible but some may be depreciable. These costs are initial repairs and classified as capital expenditure.

Good example of a basic question a personal tax adviser would answer with Yes / No.

 

For an existing rental the mulch may be a repair and maintenance issue and be deductible. Installation of turf and broader landscaping (soft land scape) may or may not be a repair.

 

I just put it all down as repair and maintenance expense... never been questioned to date.

 

I cross the road on the don't walk signal - haven't been fined yet.

 

I don't like the "yet" part of your response.

 

I think he was implying that there should be a 'yet' on the end of your post.

 

I gathered as much
But what I don't get is I send all the details to the accountant... as in I maintain a spreadsheet of all expenses for IPs and they produce my tax return. All of the ancillary expenses always get lumped together under Repairs. FY17 was $1,755 worth

 

I kick grizzly bears in the crotch and run... never been caught to date

 

Who signs the tax return?

 

You are also allowed to run naked in the street...until caught.

 

Except on the hallowed grounds of the MCG.