Insurance pay out and claiming

Insurance company is paying us some money as our patio roof got hit with hail. Payout was more than expected and I'm thinking about possibly doing a bit of work to the patio, along with replacing the roof. Like new downpipes, guttering, painting. Can I claim for these things, minus the actual roof repair?

 

Tax?Sounds like the extra is an improvement

 

You cannot claim anything that has been paid for by insurance,even if the amount you received covers extra work. You MAY by able to claim depreciation on the amount you spend minus the insurance payment.

You can’t “double dip”.
Marg

 

If they don't need to be replaced why would you replace the gutters --downpipes ect painting is different..Tax wise listen to what the experts above it only works one way..

 

Insurance have given me X amount, as that's what their builder quoted would cost to repair just the roof. If I only use a portion of this money for the roof repair, how am I meant to legitimately claim for other non related expenses then? the extra work I would want to look at doing is not in the scope of work the quote was for,
I think i'm more confused because once the money is in my account, it is mixed, any future repair/improvement i do to be house could potentially seem to come out of their pocket until their money is used up, so why would eg. replacing the hot water tank vs replacing the patio guttering be any different? probably over thinking this lol

 

The tax issues are two fold

1. The sum received is an assessable sum which may affect you as an adjustment to the asset if it is scrapped and involve a write down OR may just be assessable if the asset is not scrapped and remains in its damaged condition. The replacement may only be deductible if its confined to a portion but if all of the patio roof is replaced thats a replacement and that new roof may only be eligible for 2.5% cap works. . The excess above the cost to replace may even be a decreasing adjustment to the property costbase and not be taxed at this time. Tax advice may be required.

2. How you spend the proceeds will determine if any of the spending is deductible, depreciable or a new CGT asset not eligible for depreciation or capital works.

 

Extremely helpful Paul, thank you.

do you mean an immediate 100% deduction on the damaged portion? Is there a reason I couldn't apportion the costs into an immediate 100% deduction and the 2.5% cap works.
8 out of 10 plastic roof sheets were damaged so the 2 sheets that are not damaged are also being replaced and will only get the 2.5% depreciation? Sorry. Will be going through all this with my accountant come tax time but want to get an understanding before repairing the roof.

 

I would be seeking a invoice for the roof sheet supply & install that has bad maths eg It charges you the full price but mentions replacement of the 8 damaged roof sheets. No mention of the other two.

Your QS may be able to identify a value of the existing roof that could be scrapped ? Photos and discuss with them