PPOR to rental and tax issues

I am moving from Sydney to the far north coast of NSW for work reasons. I have a number of questions and I hope to find the answer here (especially from Dale)

1. I will be renting my house from the time of the move. However to make the house more presentable to tenants, I have had to do and am currently doing maintenance work which has been neglected for years (new gutters, patching holes, replacing rusted tin roof etc.)
The maintenance would be classified repairs rather than improvements.
These repairs are being done while I am living in the house.
Are the costs tax deductible and/or depreciable, or are they just considered capital expenditure so no way to recoup except via CGT lower cost base at time of sale (which will probably be never).

2. If I am travelling on holiday and wish to view potential IPs, how much of the costs can be apportioned (if any) to the viewing of IPs and can this be deductible. Isn't this like expenditure for research into income producing activities? I already own an IP, but only 1 so far.

3. Is there any way that rental costs can be made deductible?
If a proportion of my work is done from home, can the relevant ratio be claimed off my rent as a tax deduction?

I'm sure these questions have their answers somewhere in the forum, but I would appreciate a specific response to my situation.

Regards

lordjem
 
Hi Lordjem

Originally posted by lordjem
I am moving from Sydney to the far north coast of NSW for work reasons. I have a number of questions and I hope to find the answer here (especially from Dale)

1. I will be renting my house from the time of the move. However to make the house more presentable to tenants, I have had to do and am currently doing maintenance work which has been neglected for years (new gutters, patching holes, replacing rusted tin roof etc.)
The maintenance would be classified repairs rather than improvements.
These repairs are being done while I am living in the house.
Are the costs tax deductible and/or depreciable, or are they just considered capital expenditure so no way to recoup except via CGT lower cost base at time of sale (which will probably be never).

2. If I am travelling on holiday and wish to view potential IPs, how much of the costs can be apportioned (if any) to the viewing of IPs and can this be deductible. Isn't this like expenditure for research into income producing activities? I already own an IP, but only 1 so far.

3. Is there any way that rental costs can be made deductible?
If a proportion of my work is done from home, can the relevant ratio be claimed off my rent as a tax deduction?

I'm sure these questions have their answers somewhere in the forum, but I would appreciate a specific response to my situation.

Regards

lordjem

Let's assume that the repairs can be properly argued as such and not as improvements which is what the tax office would like to suggest in many cases.

If the property is officially available for rent, then yes, the repairs will be tax deductible eventhough you are living in the property at the time. If the property is not available for rent, then you are unlikely to be able to claim the repairs as a tax deduction.

Therefore, if I were you, I would exchange letters or contracts with a real estate agent agreeing to find a tenant for you. Verbally, you might say "don't go too hard on this one just yet" but don't put anything like that in writing. Be careful here.

Technically, unless you have a business of property investment, the expenses incurred in finding an IP are not tax deductible. Therefore, you might like to consider what other activities you are doing wilst on holiday to see if a claim can be made in another way. Of course, if you are using a trust it is a lot easier for these expenses to be claimed . . .

If you rent a unit or house that is a little bigger than necessary for your family, but do so to make space for an office then yes, a part of the rent that you pay will be tax deductible if you work from home. A letter from your employer might help in this regard to prove that you do work from home from time to time.

I hope that this helps a little.

Dale
 
Thanks Dale.

So I take it you are saying that it comes down to timing to claim the cost of repairs.

So if I will be renting it out in 2-3 months time and am doing the repairs now, I can't claim a tax deduction unless it "appears" that I have started the rental process.

Can I still claim depreciation on the fixtures etc. once the tenancy starts?

Regarding the holiday, if I do some work (have to give 1/2 day training while in the area), how much of the holiday expenses can be claimed? How is it claimed if I pay out of my own pocket, rather than my employer.
I know this isn't an IP quesion, but if you feel so inclined to answer that would be appreciated.

Regards
Jeremy (lordjem)
 
Hi JeremY!

Originally posted by lordjem

So I take it you are saying that it comes down to timing to claim the cost of repairs.

So if I will be renting it out in 2-3 months time and am doing the repairs now, I can't claim a tax deduction unless it "appears" that I have started the rental process.

Can I still claim depreciation on the fixtures etc. once the tenancy starts?

Regarding the holiday, if I do some work (have to give 1/2 day training while in the area), how much of the holiday expenses can be claimed? How is it claimed if I pay out of my own pocket, rather than my employer.
I know this isn't an IP quesion, but if you feel so inclined to answer that would be appreciated.

yes, timing will be important with regard to your property. yes, if you improve the property ready for rental, then the improvement should be eligible for depreciation.

As for the holiday . . . a lot will depend upon the facts, obviously. How long you are away etc. If you are away for 10 days and you work 1/2 day then the tax office are not likely to be understanding of claims for travel or accomodation regardless of who pays the bills. If you are away for 3 days and one day is work, then 1/3 of all of the costs is not unreasonable.

In the end, what is primary purpose of the travel is a question that is often asked by our friends.

Good luck

Dale
 
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