PPOR Renovations - Tax Deductible?

[btdunstan]

Hi guys, love the forum and looking for some advice.

I am settling on a property in 2 weeks, and it needs some extensive renovations done to it. I was wondering if any of it is tax deductible, or depreciable, or neither? And If I should wait before doing any of these works until it is converted to an IP? I have been told to speak with an accountant but I'd rather get the info from you guys for free! Lol.

These are the following works I have planned:

- Tree lopping, gardening, landscaping etc.
- Pulling down an old falling apart patio
- Sand and polish existing floorboards
- Bedroom carpeting
- New doors, windows and security screens throughout.
- Interior & Exterior painting.
- New Kitchen
- New Bathroom

I've read that some of these things might be classed as repairs, and some as improvements. And I still dont really understand how it all works.

Any advice would be much appreciated, as I may hold off doing some of this work unless you guys suggest otherwise.

Thanks!

 

[Terry_w]

How does it relation to the production of assessible income?

 

[Paul@PFI]

Initial repairs are NOT deductible but add to the cost base. The theory is you pay less for the state its in.

NONE are repairs. Important to maintain records of your costs so that the QS report can be made after completion that incorporates these costs. That way the improvements can be depreciated incl building and structural.

Given that the prop was PPOR all costs may relate to private use occupancy and never be deductible. Definitely one for a QS report.

 

[btdunstan]

Ok so the work is tax depreciable once it becomes an IP, obviously no cashy work then. Whereas if I wait until its an IP, all of these works can be tax deductible?

 

[Paul@PFI]

Ok so the work is tax depreciable once it becomes an IP, obviously no cashy work then. Whereas if I wait until its an IP, all of these works can be tax deductible?

No. I didn't say that. I said it wouldn't be deductible. Not now. Not tomorrow. The repairs appear to relate to the period of private occupancy. However where its a capital expense the cost may add to a QS report and then be depreciable.

 

[btdunstan]

Ok thanks. Should I do a QS report now? It was built in 1961 and has no significant renos done to it. Also, I plan on demolishing, subdiving and building on the block in around 5 years time.

 

[MelbGal]

I only did a QS report on my PPOR when I was about to rent it out as an IP..

I kept copies of all expenditure whilst it was a PPOR and supplied relevant details to the surveyor when they were preparing the report.

 

[btdunstan]

Great, thanks for clearing that up. So I guess I'll just proceed with the reno's, get a QS report done just prior to renting it out as an IP, and then I'll do a scrapping report prior to demolition. Thanks a lot guys.