Are you claiming cost of repairs & maintenance on rental property ?
5 July, 2022 BY Bibek Nepal, CPA

Are you claiming cost of repairs & maintenance on rental property ?

ATO has recently revealed it will be targeting rental property income and deductions this tax season.

One of the most common mistakes made by property investors when claiming tax deductions is repairs, maintenance, and improvements.

According to ATO, the repairs and maintenance costs must relate directly to ‘wear and tear or other damage that occurred as a result of renting out the property.

Repairs mean work to make good or remedy defects in, damage to, or deterioration of the property. It generally involves a replacement or renewal of a worn-out or broken part (e.g. replacing guttering damaged in a storm, fixing a fence damaged by a falling tree branch, etc).

Maintenance is preventing or fixing existing deterioration (i.e. painting the property, oiling the deck, etc.).

Improvement means work that provides something new; furthers the income-producing ability or expected life of the property; changes the character of the item you have improved or goes beyond just restoring the efficient functioning of the property.

Any costs incurred to repair or maintain your investment property can be claimed as an immediate tax deduction in the year of the expense.

You cannot claim the total costs of ‘improvements’ in the year you paid them as they are capital expenses and claimable over a number of years as capital works deductions or deductions for decline in value.

If you carry out a project that includes both repairs and improvements to your property, we recommend you ask for an itemised invoice so that you can work out the cost of repair items to claim a tax deduction.

Get in touch with us today if you have any questions on claiming tax deductions for investment property expenses.
 

Disclaimer: This article is provided as general information only and does not consider your specific situation, objectives, or needs. It does not represent accounting or tax advice upon which any person may act. Implementation and suitability require a detailed analysis of your specific circumstances. Before taking any action, consider your own circumstances and seek professional advice.

Blog

Related Blogs

May 8, 2023
BY Bibek Nepal, CPA
Tax planning refers to the process of arranging your finances in a way that minimizes your tax li...
February 27, 2023
BY Bibek Nepal, CPA
What is Fringe Benefits Tax? Fringe Benefit Tax (FBT) is a tax levied on non-salary benefits o...
January 15, 2023
BY Bibek Nepal, CPA
  Happy New Year! It’s that time of the year to muse on what you hope to accomplish over the...
December 4, 2022
BY Bibek Nepal, CPA
Companies are subject to a tax rate of 30% on their taxable income, except for certain companies ...
November 22, 2022
BY Bibek Nepal, CPA
Businesses are continuously evolving over time because the industry is constantly evolving as wel...
November 8, 2022
BY Bibek Nepal, CPA
If you are Australian resident for tax purposes, , you will need to declare and pay tax on your w...
October 24, 2022
BY Bibek Nepal, CPA
You may be considered to have taken Div 7A loan from your company if you (or your related party)...