Claiming renovation expenses...

[Electro]

Hi guys,

I am contemplating purchasing a property in need of a little TLC that I will live in for 6 months (to claim the FHOG) and then turn it into an IP.

During the time which I am living in it I will give it a bit of a reno (paint, carpets, maybe kitchen and bathroom etc). Now because technically I am OO during the period while doing the reno will I be able to claim any of the expenses incurred to complete the reno?

Will I be able to depreciate all of the upgrades as normal?

Generally speaking what can be claimed as an expense and what usually has to be depreciated with an IP and is there any difference (or tax benifit) in doing the reno after turning it into an IP?

 

[jrc]

Your renovation will only be depreciable. Tax law assumes that the condition of the property is reflected in its cost and that anything you do initially is to bring it up to scratch ie they are not repairs

 

[Electro]

Your renovation will only be depreciable. Tax law assumes that the condition of the property is reflected in its cost and that anything you do initially is to bring it up to scratch ie they are not repairs

So whether the property is your PPR or an IP during the time you complete the reno will make no difference in terms of when/how you depreciate it as a whole when it becomes an IP?

 

[depreciator]

Yep. That's right.

Basically, repairs/maintenance can be expensed if the cost relates to damage incurred while the place was being rented out.

Scott