Capital Improvement or Not


I have a new unit about to be completed and have decided that I will install a new split system reverse cycle air conditioner.

I have two options as I see it...

1. Prior to settlement, I would arrange for another company to undertake this work in an effort to save paying a premium to the builder for arranging for the installation etc. On the proviso that the builder is happy with my proposal, and that the A/C unit is installed prior to the commencement of the first letting term, can this be included in the cost base price from a taxation perspective?


2. Install the unit after settlement has been effected and arrange for a third party to undertake the installation etc. From my very limited understanding of the CGT legislation will this then be considered an improvement or a repair with regards to future tax liability etc?

My preferance is to install the A/C unit after settlement but before the first tenant moves in, but I fear that this will mean that I will not be able to maximise my deductions etc.

Hi Fredo

It will make no difference at all. Either way, the A/C will an improvement that will be depreciated over time.