Deductions on renovations on IP -> PPOR

Discussion in 'Accounting & Tax' started by Michael_T, 25th Sep, 2015.

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  1. Michael_T

    Michael_T Member

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    Hi All,

    I have my PPOR which I have been renting out as a IP for the 5 years as I have been living abroad.

    I am planning to move back into my PPOR soon, and was wondering if I make some renovations (to return to original state) prior to me moving back i.e carpets, paint etc would it be tax deductable?

    And if so, what time period after my tenants move out do I have to get the renovations completed to be deductable.

    Thanks!
     
    Michael_T, 25th Sep, 2015
    #1
  2. D.T.

    D.T. Specialist Property Manager Business Member

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    bzzt :)
     
    D.T., 25th Sep, 2015
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  3. EN710

    EN710 Well-Known Member

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    Ask your accountant
    I think once you move in they won't be deductible at all o_O i.e. only deductible on the period your tenant is in.
    Maybe make lots of <$300 improvements before EOFY, claimed it all and move after EOFY :rolleyes::p
    Disclaimer: I am not an accountant!
     
    EN710, 25th Sep, 2015
    #3
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Renovation work is generally depreciated over a number of years. Once the property is no longer available for rent the depreciation claims stop. However the costs could potentially be claimed against CGT when sold.
     
    Terry_w, 25th Sep, 2015
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  5. melbournian

    melbournian Well-Known Member

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    it would normally be added to the capital base being you are going to be living there and as terry mentioned claimed against CGT when sold. and the ATO would easily pick it up anyway if for example last couple of years your deductions was X amount then suddenly it is (X times 5). They will ask for clarification.
     
    melbournian, 25th Sep, 2015
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  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Some costs may well be deductible ie repaint interior etc. However if its a bigger project that could all be classified as capital and none deductible especially if there is no cost breakdown on a invoice. Just Div 40 and 43 but....since you moving back in it wont be deductible while your reside there.

    For repaint etc I would do it immediately and before you move back in.
     
    Paul@PAS, 25th Sep, 2015
    #6
  7. Michael_T

    Michael_T Member

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    Thanks all for the replies, was helpful.
    Obviously will consult my accountant just wanted to gather other's experienced inputs.
     
    Michael_T, 25th Sep, 2015
    #7
  8. Julia

    Julia Active Member

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    Refer IT 180 if there are actual repairs (bringing the property back to the condition it was in when you bought it) and those repairs became necessary as a result of tenant damage then providing the property did actually earn income in the financial year that you incur the repairs they are deductible.
     
    Last edited: 27th Sep, 2015
    Julia, 26th Sep, 2015
    #8