Renovations cost - tax claim with GST or cheaper without GST

Hey guys,

Need some advise since this is out first IP.
We plan to do painting and wall patching, cost us around $2200 before renting this out. My tax agent told me I can claim it - hopefully yes since I am a bit doubtful after reading your forum that we can't claim any reno work before getting the tenant...

Question, since it's not expensive
Is it better to pay without GST so it's cheaper or pay GST so can claim it on tax return?
Many thanks.

Vanvir

 

Repairs before you rent out the property are usually not deductible, but can be added to the fist base for cgt calculations.

Make sure you take advice from a qualified accountant.
Marg

 

Hey Vanvir did you manage to get a definitive answer to your question? I was hoping to claim a roof restoration or part thereof when we rent it out in about 3 months. I think the roof reno may count as a capital expense though. If you get the advice let me know mate. Thanks

 

The difference between tax deductible and adding to cost base is whether it is a repair of an improvement.

If it's necessary to fix it you can claim it as a deduction, if it is to improve the house then it goes against any capital gains tax.

Though I am not an accountant, this is my basic understanding.

 

You do not have an option to pay GST.....unless you find someone who is not registered.

It must be a prior existing repair, otherwise your just improving, look up the tax office website.

 

Good explanation Simon

The painting would also be an initial repair. Not deductible. The general principle is you purchased a property with defects and the sale price factored that in. If your tax agent told you it was deductible that may be a ign they arent a property tax savvy adviser.

 

Same issue. A roof replacement well within a long period of tenancy or damaged by external factors (storm, hail etc) would normally be a capital expense however as a roof is a part of a building then its not a whole replacemnet and so it may be a deductible cost

 

If by

you mean pay cash with no receipt you leave yourself open in a lot of ways.

"Saving" on GST in this way is tax avoidance and illegal both for you and the contractor requesting cash. There are plenty of threads on this.

 

Scott - Yep that could be the OP question too. If you dont have a receipt / tax invoice there may be no deduction.