Hi everyone, Is the replacement cost of a stolen item in a rental property immediately deductible? Say the letterbox in my rental property is stolen. I put in a new one of the same brand/model, which costs $200. Is this $200 immediately deductible in the current financial year? I reckon yes as it can be considered as repair cost. Is that right? Also, how will this affect the existing depreciation schedule? Say a depreciation schedule is made which includes a letterbox. Three years later, the letterbox is stolen, and a replacement of the same brand/model is put in, which costs $200. This is what I think is right on this occasion: (a) claim $200 as repair cost in the current financial year; (b) the existing depreciation schedule is still applicable in the current year and the years to come in relation to the letterbox originally documented in the schedule, and no amendment to the schedule is needed. Any thoughts would be much appreciated.
Sort of. Technically, no. The cost is capital in its nature as a new / replacement item. Its is subject to the capital asset deduction / depreciation rules. The cost is immediately deductible rather than depreciable if the total installed cost is under $300. This a good example of a issue that is not a repair. A repair remedies a defect. A replacement doesnt repair the missing item. This is the common mistake people make with carpet. Replacement of carpet is a different asset. I would have doubts that a individual asset is identified in a QS report as it should be a cost that has migrated at some point to a pool. The former item cant be scrapped if its in a depreciation pool.
