Refresh property between tenants - available for rent requirements query

Discussion in 'Accounting & Tax' started by Joynz, 27th May, 2020.

Join Australia's most dynamic and respected property investment community
  1. Joynz

    Joynz Well-Known Member

    Joined:
    5th Apr, 2016
    Posts:
    4,468
    Location:
    Melbourne
    My tenants leave in late July and I’d like to paint the whole interior and update the kitchen cabinets.

    Is there any issue - related to tax deduction - if I don’t advertise it straight away for rent, while I paint etc?

    Does the interest on the loan become non-deductible because It’s not available for those two weeks?

    I can either take it off the market for a couple of weeks or alternatively let tenants see it while it is being done up.

    I suspect it won’t lease straight away anyway.
     
  2. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    15,138
    Location:
    Sydney
    It is governed by the principles in Steele's decision. Provided the intention is to relet there is no concern. If anyone occupies during that period is could affect isssues. But vacant while undergoing repairs and repaint are quite OK. I imagine it is available to let in that time with the agent telling anyone interested it isnt available for two weeks while undergoing the refresh. They may build a short list of interest while its being painted
     
    thatbum likes this.
  3. rizzle

    rizzle Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    284
    Location:
    Melbourne
    Paul - what if I am preparing to convert my PPOR to an IP - Are there any circumstances where renovations in preparation for tenants will be tax deductible? (while I am still resident there)
     
  4. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    15,138
    Location:
    Sydney
    No. The maintenance relates to your occupancy. Its never deductible and even if you wait until the tenant arrives its still not incurred due to the tenant. But the costs may be subject to div 43 capital allowances BUT not Div 40 depreciation. Div 40 is only available for new assets not used while you live there.

    The inverse of this occurs for a former IP that becomes a home. The Commissioner would allow a deductible repair cost for tenancy damages (eg repaint etc) paid AFTER the tenant departs and while its your own home provided it is completed and paid prior to 30 June. of that financial year.