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Depreciation or expense on decorating and re-flooring?

Discussion in 'Accounting & Tax' started by James Bond, 3rd Sep, 2015.

  1. James Bond

    James Bond Well-Known Member

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    Hi

    1. If I redecorate the interior walls of a property which has not been painted in 12 years, can I claim that as an immediately deductible expense or do I have to depreciate it?

    2. If I recarpet a property with a 12 year old carpet, can I claim that as an immediately deductible expense or do I have to depreciate it?

    3. If I remove a 12 year old carpet, and replace it with a different flooring material such as a laminate floor, can I claim that as an immediately deductible expense or do I have to depreciate it?

    Thanks for any advice.

    JB
     
  2. Depreciator

    Depreciator Moderator Staff Member

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    1. Have you been renting it out for 12 years? If you have, you would have a good case to claim that repaint as a repair.
    2. Recarpeting a whole property is never going to be a deductible expense. You need to depreciate it.
    3. Depreciate.

    Scott
     
  3. James Bond

    James Bond Well-Known Member

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    Hi Scott and thanks -

    1. No it has only been rented out for 2 years, it was my father's PPOR before that and is now owned by me.
    2. Only bedrooms being recarpeted, rest of property remains existing laminate floor.
    3. Only bedrooms being refloored, to match rest of property.

    Does that leave the answer to all 3 as "depreciate"?

    JB
     
  4. Depreciator

    Depreciator Moderator Staff Member

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    1. The rough definition of repairs is to 'restore something to the condition it was in when you started renting it out'. If you've had dud tenants for 2 years who really trashed the place, you might be able to claim painting. You would be wise to have evidence, though.
    2. There may be some residual value in the carpet being tossed out. Has your dad been claiming depreciation? The new stuff going in will need to be depreciated.
    3. Ditto.
     
  5. James Bond

    James Bond Well-Known Member

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    Thanks Scott.

    1. No, they haven't trashed it, so I guess we have to depreciate.
    2. My Dad had this property as his PPOR, so he wasn't claiming depreciation. The depreciation report was performed by your UK QS based on photos I had taken, the carpet is 12 years old although the property has only been inhabited (by anyone) since 2006, it was a new build and was uninhabited for the first 3 years. How would we assess if the old carpet has residual value?

    Thanks

    JB
     
  6. Depreciator

    Depreciator Moderator Staff Member

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    Ah, so it's a property in the UK and you have a Dep Schedule. That's good. The carpet will have a written-down value. Give me a yell and I'll retrieve it and talk you through it over the phone - I'm guessing your name is not James Bond. Your accountant will also know what to do. We can add any new stuff to the existing Schedule - we don't charge for that sort of thing.
     
  7. James Bond

    James Bond Well-Known Member

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    Melbourne
    Many thanks for all your help and time on the phone Scott.

    JB