Cutting termite damaged dead tree expenses

I have to spend a few thousand dollars to cut and remove a termite damaged tree in an investment property. Can I claim that expense in the tax return?

For example I spend $5000 to remove a damaged tree because it's a risk for neighbouring houses.

Can I claim that whole $5000 in the next year tax return or it should be divided into portions?

 

It is maintenance. Likely deductible if infested or diseased rather than you hate trees for example or you want to do it so a neighbour wont sue. The tree needs a defect so retain evidence of that if its later queried. It may depend if the property was recently acquired too or if use of the property could be a factor too eg Its been there for 4 years while you lived there and now its a IP & you want the cost to be deductible.

 

I suppose if you use a crane and take it out in One piece, then it would be a single item but if they cut it up, there'll be many smaller claims.

 

I am still in the process of purchasing the property. Building and pest report has mentioned about the tree that it has a termite colony. Also it's risking falling on the neighbour's house. It was indicated as an extreme risk in the pest report. So I'll have to cut and remove it as the first thing after purchasing. So I should be able to claim the total in one ITR?

 

In that case ....It is NOT deductible. The defect (evident or not) means you are paying less so the expense to remedy is capital in nature. This is a initial repair. When you do the work wont change its deductibility.

Remedying defects you acquire is never deductible. The premise is that you paid less for a defect vs another person who did not. Making it good is a form of acquisition cost. The tree cost does add to the CGT costbase however.

 

No, it's an initial repair and added to your cost base.

 

Did you mean ask the seller to do it and add the cost to the purchase price?

 

Thanks, got it. Cost to remove the tree is $5000, seller is only happy to reduce the price by $2000. I have to pay the rest and do it after the settlement.

 

Get more quotes!

 

Hi Paul, if it is a PPOR to IP situation, that contract with PM is signed and property is vacant, then PM suggests op to remove the infested tree before tenants move in, will that be defect repairs (deductible)? or still be initial repair added to cost base?

 

initial repair

 

Pics ?

If the vendor won't budge, take the $2,000 and treat the tree/termite colony and leave the tree for a later date (when it becomes deductable).
The tree having termites if left will eventually become a risk, it just varies as to how much they've eaten of it !
You won't know until it is cut down, does the tree "look" sick ?

*Its like the mechanic saying your brakes are nearly worn out (15%), if you are a delivery driver around town thats 8-10 weeks, if you only drow the kids to school 3km from home you could have a year remaining.....

 

Thanks Terry. What if the removal happens during tenancy and in between tenancy? Can the expense be deductible in both scenarios?

 

Tax Tip 206: What are ‘initial repairs’ and why they are not deductible? Tax Tip 206: What are ‘initial repairs’ and why they are not deductible?

 

Actually if you want to remove existing trees it would be an improvement, not deductible but could be a cost base expense, if removed after income producing.

 

This private ruling is typical of the issues

https://www.ato.gov.au/law/view/view.htm?docid=EV/1051568532768&<img src=\