Painting the house outside

[Daniela]

The IP we have needs painting outside pretty bad. As far as I know it's repair and not improvement.
Still, I wasn't sure if that's tax deductable. This would change things as if we are going to paint it or get someone else to do it.

 

[BayView]

It's a repair.

tax deductible during the financial year it occurred.

If you pay someone else to do it, it's still tax deductible; just costs more than if you do it.

 

[wylie]

How long have you had the IP?

 

[Lukey13]

What happens if you change your PPOR into an IP and then within 12 months give it a repaint?

Would this be deductible as "repairs"?

Would the above be affected by the fact it desperately needed a paint while it was still a PPOR?

 

[buzzlightyear]

What happens if you change your PPOR into an IP and then within 12 months give it a repaint?

It would difficult to claim the full amount. I believe the principle is, what amount of deterioration has occurred in the period that is has been used for rental, that has contributed to its current condition. A QS will be able to confirm what amount you could claim. An uneducated view (admittedly), but would have thought 50% would be the max given what you have said.

Would this be deductible as "repairs"?

The component that you would claim would be classed as a repair.

Would the above be affected by the fact it desperately needed a paint while it was still a PPOR?

Yes. Once you rent the property, you can only depreciate the cost at 2.5% per annum.

 

[depreciator]

Quote:
Originally Posted by Lukey13
What happens if you change your PPOR into an IP and then within 12 months give it a repaint?


Luke, you would want to chat to your accountant about this. And you would want your accountant to be pretty good. In TR 97/23 there is a glimmer of hope for you. Because the property was your PPOR, maintenance work you do not long after renting it out is not really classed as 'initial repairs'. If the work you are doing is not an improvement or an addition (and painting the outside wouldn't be) you can probably deduct the cost:

76. In appropriate circumstances, expenditure for repairs can qualify as a deduction even though the property has previously been held, etc., by the taxpayer for non-income purposes. This situation is different from an initial repair done to newly purchased or newly leased property, where the repair expenditure is capital expenditure.

77. A deduction is allowable under section 25-10 if, when the repair expenditure is incurred in a year of income, the property is held, etc., by a taxpayer for income purposes:

(a) even though the property has previously been held, etc., by the taxpayer for non-income purposes; and
(b) even though some or all of the defects, damage or deterioration arise from, or are attributable to, the taxpayer's holding, etc., of the property before its holding, etc., for income purposes; and
(c) provided that the repair expenditure is not capital expenditure.

It would depend in part on how long the place was your PPOR for. Certainly worth exploring with your accountant.

Scott

 

[Daniela]

We had it for about five years now.

 

[depreciator]

This thread went off on a bit of a tangent with the PPOR to IP thing.

Daniella, if it's an IP you have owned for 5 years, claiming a recent repaint as 'repairs/maintenance' seems pretty reasonable. If you'd only owned it for a year, you'd be pushing it.
Nobody will be able to tell you definitively, but I'm sure your accountant will let you claim the painting as an expense.
Scott