"Number of weeks property was rented" to calculate tax expense claims

Discussion in 'Accounting & Tax' started by ForReal, 12th Mar, 2019.

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  1. ForReal

    ForReal Member

    Joined:
    23rd Jan, 2018
    Posts:
    8
    Location:
    WA
    Hi there

    We have a 60's rental that was rented for 10+ years by the same tenant (yes, have been lucky!)

    As it only had a partial renovation (excluding bathroom/kitchen) back in the 90's, it needed some major renovations to make it "rentable" again in the current rental market.

    It took us 2.5 months to complete the reno and then another 3 months to find a tenant (despite the extensive renovation work) - so 5.5 months untenanted.

    My questions are:
    1. Apart from the renovation capital works deductions, can all other ongoing deductions be claimed for the entire financial year or are there certain things that cannot be claimed during the reno/whilst vacant looking for a tenant? Found lots of info on renovating PRIOR to starting a rental, but not much about renovating IN BETWEEN rentals.

    2. In a tax return section for rental property Schedule, for the question "number of weeks the property was rented this year", can we still put the 52 weeks as it has been a rental for over 10 years and that status did not change during or after the reno. Also stating that it wasn't in rentable condition prior to the renovation due to the original 60s fitout which could not compete with current oversupply of near-new modern rental places.
    In the expenses section, it also refers to prv%. What is this and how is it calculated?

    3. A few reno claims that we are also not sure where to deduct / what category as unsure they should go into capital works depreciation
    * skip bin hire for removal of building rubble
    * asbestos fence removal (itemised separately from new colorbond fence install) - fence itself will be depreciated as we decided to replace the fence entirely with a different material (even though only sections of the asbestos fence were damaged - but didn't want to take any risks with futher deterioration of remaining fences due to Asbestos factor and age). So how would the asbestos removal be classified as a deduction/expense?

    Feedback appreciated!
     
  2. D.T.

    D.T. Specialist Property Manager Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    9,190
    Location:
    Adelaide and Gold Coast
    Usually available for rent (provable by advertising, or other similar proof) will count toward your weeks rented, but not your reno time.

    I'll leave the deduction questions for a professional like @Paul@PFI
     
  3. Terry_w

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

    Joined:
    18th Jun, 2015
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    Location:
    Australia wide
    see Steele for authority that deductions can be made while a property is not available for rent.
     
  4. ForReal

    ForReal Member

    Joined:
    23rd Jan, 2018
    Posts:
    8
    Location:
    WA
    Does this mean that the period would be 42 weeks in this case? And if so, how would that affect expenses incurred (both due to reno and ongoing expenses, before, during and after reno?)