Bought an IP in around 8 months ago (an old 1970's building strata).
Tenants reported there is water leakage in the bathroom and also affected some hallway carpet area (become wet). After a consultation with some "bathroom contractors", it seems all the tiles area need to be changed (which is almost 75% of the bathroom, so it's kinda semi-renovation). It's going to cost roughly about 8000.
I'm not sure whether this can be categories as "repair/maintenance" or "improvement", since the property just been bought around 8 months ago.
When purchased, I organised the building inspection, but it's all good (around 1970's building).
My question:
1. Can I assume this:
a. As a repair/maintenance? (so I can deduct the cost immediately for my tax return)
or
b. Is this an improvement? (so the only thing I can claim the cost is via depreciation)?
2. I'm planning to use my Line Of Credit (LOC) to fund this work.
a. Can I claim the interest of the 8000 for my tax return as deduction?
b. Do I have to split these 8000 from my LOC, so it's more accountable for ATO to check/audit (honestly, I don't want to split it again, since my LOC already have 4 split accounts). Any idea to get around this loan?
Can someone please help/advise?
Thanks. Much appreciated.
Tenants reported there is water leakage in the bathroom and also affected some hallway carpet area (become wet). After a consultation with some "bathroom contractors", it seems all the tiles area need to be changed (which is almost 75% of the bathroom, so it's kinda semi-renovation). It's going to cost roughly about 8000.
I'm not sure whether this can be categories as "repair/maintenance" or "improvement", since the property just been bought around 8 months ago.
When purchased, I organised the building inspection, but it's all good (around 1970's building).
My question:
1. Can I assume this:
a. As a repair/maintenance? (so I can deduct the cost immediately for my tax return)
or
b. Is this an improvement? (so the only thing I can claim the cost is via depreciation)?
2. I'm planning to use my Line Of Credit (LOC) to fund this work.
a. Can I claim the interest of the 8000 for my tax return as deduction?
b. Do I have to split these 8000 from my LOC, so it's more accountable for ATO to check/audit (honestly, I don't want to split it again, since my LOC already have 4 split accounts). Any idea to get around this loan?
Can someone please help/advise?
Thanks. Much appreciated.