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Interest Deduction of IP minor renovation

Discussion in 'Renovation & Home Improvement' started by Lewis, 1st Sep, 2016.

  1. Lewis

    Lewis Member

    Joined:
    12th Jul, 2016
    Posts:
    11
    Location:
    Melbourne
    Hi guys,

    Just looking for general advice before I proceed.

    We just bought an investment property and settlement will happen in the next month or so. Planning to renovate the bathroom and do some painting, blinds and other minor things before renting it. Budget is $15K.
    Some things will be DIY and some other will require tradies.

    We have a loan split from our Home that was used for the IP deposit, stamp duty and conveyancer costs. We could also use money from our PPR offset.

    Questions are:

    1. Is the interest from the portion of the loan split used to buy tools and materials (DIY) and to pay tradies tax deductible?

    2. If not, What would it be the best way to approach a minor reno (DIY + tradies) from the financial point of view.

    I already know that a quantity report after the reno is a must. However, I'm not sure how all this works when tax time comes.

    Read a bit about it here, in my case Loan and reno are on the same IP, dont think i need another split, do I?
    LoC funds for renovation - interest deductible?
    Legal Tip 15: An issue with mixed purpose loans where both portions are investment.

    Cheers, Lewis.
    0435866470
     
    Colin Rice likes this.
  2. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Location:
    NSW
    Tools for a once off reno? How much is the cost of these tools? Do you plan to use them again on other IP renos?

    Yes but not your own labour.

    As you are doing seems OK

    Depreciation schedule will be used for "on paper" deductions off your taxable income.
     
    Lewis likes this.
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    1. generally yes for investment expenses. Don't know about the tools though. If sole purpose is investment related them maybe.

    Not split would be needed as you are not mixing purposes.
     
    Lewis likes this.
  4. Lewis

    Lewis Member

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    Location:
    Melbourne
    What I meant with tools was things like paint brushes and paint rollers but It will make things messy.
    Very Good point.

    Thanks for the help.

    Cheers,
     
  5. Lewis

    Lewis Member

    Joined:
    12th Jul, 2016
    Posts:
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    Location:
    Melbourne
    Got it, thanks Terry. Will stick to materials and trade services only to make it cleaner.
     
  6. Username86

    Username86 Well-Known Member

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    31st May, 2016
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    Perth
    I would consider rollers and paint brushes to be consumable items. I cant imagine you would have any trouble claiming these kind of items..
     
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