Repairs and Maintenance before receiving rental income

Discussion in 'Accounting & Tax' started by norm226, 29th Mar, 2016.

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  1. norm226

    norm226 Member

    24th Oct, 2015
    Camden, NSW
    Hi all, I know there are two "official" ways to get an answer to my question (my Accountant and an ATO Private Ruling) but I just thought I would scan your experiences and see if you can advise or point me in the right direction??

    I have just settled on an IP in Canberra (on 11 March 2016) and prior to settlement I have lined up a lease offer from DHA (I have a letter dated 4 March 2016) which says "I am pleased to advise that DHA would like to offer you a lease subject to the terms and conditions set out below"

    Now the terms and conditions were:
    • some paint (a few rooms)
    • some cleaning (carpet, curtains, general)
    • bathroom/ensuite/laundry exhaust fan upgrades (a bigger in-line motor)
    • minor plumbing (one water leak)
    My question is, does the letter dated 4 March confirm that my IP is "available for rent" and therefore the expenses incurred around 19-26 March are claimable this year, and not categorised as a capital expense (claimable at disposal)?? Or am I out of luck and claim it all in CG calculations in 20-30 years time??

    TIA Norm.
    Xenia likes this.
  2. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    18th Jun, 2015
    Not really.

    Cleaning may be claimable, but paint and fan upgrades would be capital. Minor plumbing may be claimable depending on what it is.

    Don't forget capital assets can be depreciated.
    BMT Tax Depreciation and Xenia like this.
  3. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Member

    18th Jun, 2015
    I would go further. No. Preparing a property for first rental is capital / initial expenses. None of which would be deductible. Some possible a Div 40/43 deduction over time. The key issue is the capital expense thershold.