Hey all, For an investment property have some under house drainage works that were quoted on as part of settlement (it was mentioned in the contract that so long as the quote was less than $X then settlement was to proceed) and commenced shortly thereafter. Total cost $15,000.00 inclusive of any GST It would in my mind be an 'initial repair' as the works are being done (they are currently still ongoing) to remedy poor underhouse drainage. However the drain did not exist when the property was bought-we are putting it in, so not really 'repairing' anything. Four questions please: Is my definition correct? Do I claim these works as a capital works deduction? In FY2019 we have only paid $7,500.00 worth of costs, final half payment not due until works are finished (next few weeks), how do we adjust for this? Do I only make the entire claim in FY2020 tax return? How does one work out the claim for these capital works deductions? Is it simply 2.5% of the total cost each year for 40 years starting from the construction end date? Because it (the works) were partly noted in the contract, does this form part of our capital gains cost base for capital gains tax? Thank you very much-your help is greatly appreciated, gty12
best to get some tax advice. Sounds like capital improvements to me. 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?
