Hi everyone, Just purchased my first investment property at the age of 22 and trying to wrap my head around all the tax rules. I'm quite confused about when I can start claiming tax deductions. ATO states: "Your property must be genuinely available for rent to claim a tax deduction. This means that you must be able to show a clear intention to rent the property. Advertise the property so that someone is likely to rent it and set the rent in line with similar properties in the area. Avoid unreasonable rental conditions." I need to make quite a few repairs and new additions such as window furnishings before I can rent it out, and I'm not sure whether these repairs/additions would be tax deductible. I'm showing a clear intention to rent the property through purchasing landlords insurance, gave up my FHOG and my loan is for an investment property, however I'm yet to advertise the property for rent - so does that mean its not genuinely available for rent? Any guidance would be greatly appreciated.
legislation changed a few days ago I believe on claiming things before renting. Seek specific advice from your tax advisor.
What's the problem with having a For Lease sign out the front of the property and having it advertised now? You can be there putting up curtains and doing minor repairs during this period. Most tenants have to give at least 14 days notice to their current LL anyway - so it would be unusual for someone wanting to move in straight away. Your repairs and improvements will most likely be not tax deductible immediately (because that is how you purchased the property in the first place), but will be depreciated in the case of improvements and minor repairs possibly likely added to the cost base. As @Terry_w said above in his post, you need specific tax and accounting advice regarding this when you get tax return time.
The main issue in the originating post is that of initial repairs. They are considered non-deductible and are capital expenditure. Fixing up a property just acquired inst deductible. Only repair of defects caused by tenancy will be deductible - later obviously. Interest on a deposit etc will be deductible if the property is intended to be rented. The settlement sheet from the solicitor may include some other adjustments for rates, strata etc that will also be deductible.
