Deductibility of renovation/repairs?

Hi guys,

Quick question. Recently bought 3 properties - 2 of which will have some repairs/renovations needed. I've heard conflicting advice here, so just wondering whether these repairs/renovations are tax deductible or will form capital works?

The works include re-carpeting, painting, repairs to guttering, repairing holes in walls etc.

I was thinking of getting a tenant first, and then doing the repairs as required. I am in a high income bracket so hoping it is deductible!

Cheers

 

Sounds like some capital works and some plant and equipment. both claimable over several years.

 

They're not 'repairs', Jmillar.
The ATO's definition of repairs is roughly: 'to repair damage done while YOU were renting out the property.'
What are you doing in fixing stuff soon after purchase is 'improving' the property. You can claim those improvements at 2.5% or add them to the cost base of the property.
Assets like carpet can be depreciated much more quickly than structural stuff.
Scott

 

Some may even be initial repairs evident at time of acquisition. Such repairs are excluded as deductible even if they might have been and are then subject to Div 40 / 43 deductions. eg holes in the wall.

One issue to consider is that any capital assets that are obsolete as a consequence of these reno's may be capable of write-off. eg a old combustion fireplace, carpet, cabinets that you decide to discard and replace. The former items may have a scrap value. Your QS report may assist or a special report may need to be prepared.