Painting - deductible repairs?

[Roosterman]

Hello All,

I have an IP that used to be my PPOR. Before I rented it out, I fixed up cracks in the walls, repainted etc.

There has been a tenant in there for 4 years.

I've let the tenant go as I want to renovate and then sell the property.

In the past 4 years the building has shifted again and the cracks have reappeared in the walls, along with a bit of damage from picture hooks etc.

Is it legit for me to claim the cost of re-painting as a repair? I am merely returning the condition of the walls to what it was before I rented it out?

many thanks
Roosterman

 

[depreciator]

Yep. I reckon that sounds fine. Take pics of the damage before you repair it.

Prompted by Rob's comment below, the imminent intended sale complicates it - I didn't read your post carefully enough.

 

[Rob G.]

I've let the tenant go as I want to renovate and then sell the property.

Hmmm .... sounds a bit like a capital expense.

(1961) 12 TBRD Case M2

Restoration after tenancy for sole purpose of sale.

You need to take all facts, records, etc. to a registered tax agent for a detailed review.

Cheers,

Rob

 

[Roosterman]

Thanks guys

I was thinking it would be ok if I rented it out again, but the fact that I am now selling it might make a difference.

 

[GaryT]

If the tenant moves out and you do some repair work before selling the property you will have a problem claiming the repairs because the property isn't really held as a rental while the repairs are being done – it is actually held with the intention of selling or moving into it.

However, Income Tax (IT) Ruling 180 makes a concession that even if you are not re-letting the property, providing the necessity for the repairs relate to a time that it
was used to produce income AND the repairs are incurred in the same financial year as the property was used to produce income, you can claim the deduction.

I think the painting is deductible.

 

[Rob G.]

You missed the IT 180 reference to difficulties with tax board rulings on 'terminal repairs'.

Get legal advice.

Cheers,

Rob

 

[GaryT]

IT 180 seems pretty clear to me and it is still current. There are also numerous PBRs that confirm its application

Don't think I need a lawyer to understand it but hey that's just my opinion.

 

[namesymot]

I'm in similar situation, recently switched my PPOR into IP and looking to get small painting job done to remove scruff marks from the walls before renting it out.

Rather than starting a new thread on similar question, just wondering if the costs related to the painting job can be tax deductible. We've just got a quote from a painter for the work and it's upwards of $600 (for just a small job!). If the costs cannot be tax deducted, I might have to do it myself.

 

[Roosterman]

I think you'll find your situation is different, as your repairs relate to the period when it was your PPOR.

If you were doing repairs/a reno prior to renting it out then you would be able to claim depreciation, as opposed to any immediate tax deduction.

But I'm no expert

 

[syba]

Technically it's not 'depreciation' (division 40) but rather a capital works 'deduction' (division 43). In your instance you would write off the painting over 40 years (2.5% pa).