Hi,
I purchased an investment property brand new almost 4 years ago. It came with a brand new dishwasher that was valued at $1887.00 new in the depreciation schedule (which was done when I first started renting it out 4 years ago).
The dishwasher has now broken and the written quote has deemed it unrepairable as a new motor cannot be obtained. It doesn't seem to be through malicious damage its just wear and tear or simply broken.
The property is currently negatively geared.
A quote for a replacement (different brand and not an 'ideal' fit for the space) is in the range $725 to $855.
I do plan to sell the investment property to buy a PPOR, and I don't have an exact time frame, but it may be as soon as a couple of years time.
The current tenants are domiciled overseas and likely to return home at the end of their current tenancy agreement at the end of November.
I am debating the following options:
1) Simply replace the dishwasher. As repairing the old one is not an option, and the quoted replacements are significantly less than the original one, I am wondering whether this might be considered a "repair" rather than a "capital improvement" for tax purposes? However, if it is deemed a capital improvement, how much of this expense am I likely to see back through tax in a couple of tax years through depreciation? Would it likely be written off in the first 1-2 tax years? As very rough guide how much of that money could I expect to get back through a tax refund - either it being defined as a 'repair' or a 'capital improvement' ?
2) the other option would be to rent one just until the end of November. This cost would appear to be in the region of $13 - $15 per week. I'm not sure, but I think these rental contracts might be for about 18 months though. It may also reduce the rent I could achieve when attempting to re-rent without a working dishwashing fixture.
Property is located in a blue chip inner city suburb so no issues with being able to re-let, although the end of tenancy is getting a tiny bit close to Christmas and I actually did have a bit of difficulty finding tenants in December last year.
Your thoughts on the best option?
I purchased an investment property brand new almost 4 years ago. It came with a brand new dishwasher that was valued at $1887.00 new in the depreciation schedule (which was done when I first started renting it out 4 years ago).
The dishwasher has now broken and the written quote has deemed it unrepairable as a new motor cannot be obtained. It doesn't seem to be through malicious damage its just wear and tear or simply broken.
The property is currently negatively geared.
A quote for a replacement (different brand and not an 'ideal' fit for the space) is in the range $725 to $855.
I do plan to sell the investment property to buy a PPOR, and I don't have an exact time frame, but it may be as soon as a couple of years time.
The current tenants are domiciled overseas and likely to return home at the end of their current tenancy agreement at the end of November.
I am debating the following options:
1) Simply replace the dishwasher. As repairing the old one is not an option, and the quoted replacements are significantly less than the original one, I am wondering whether this might be considered a "repair" rather than a "capital improvement" for tax purposes? However, if it is deemed a capital improvement, how much of this expense am I likely to see back through tax in a couple of tax years through depreciation? Would it likely be written off in the first 1-2 tax years? As very rough guide how much of that money could I expect to get back through a tax refund - either it being defined as a 'repair' or a 'capital improvement' ?
2) the other option would be to rent one just until the end of November. This cost would appear to be in the region of $13 - $15 per week. I'm not sure, but I think these rental contracts might be for about 18 months though. It may also reduce the rent I could achieve when attempting to re-rent without a working dishwashing fixture.
Property is located in a blue chip inner city suburb so no issues with being able to re-let, although the end of tenancy is getting a tiny bit close to Christmas and I actually did have a bit of difficulty finding tenants in December last year.
Your thoughts on the best option?
