Tax deductability new property

[mrbassman]

Hi Guys,

I got conflicting info between my current and previous accountants.

I settled on a new property(3 bed). I am renting 2 beds out and living in one.

In general does this mean I can claim 2/3 of things listed on this page:
http://www.ato.gov.au/General/Prope...or_which_you_can_claim_an_immediate_deduction

A couple of months after settlement, the ceiling in the living room died a violent death and the retaining wall met its match after a storm. Would these be repairs or treated as capital costs? ie 2/3 written off as repair, or depreciated as per new depreciation schedule?

So confusing. Was easier when it was just an IP haha.

 

[Paul@PFI]

Some expenses are deductible on a proportionate basis. Some not.

Just because something is damaged it doesnt mean its a repair when its fixed. For the ceiling its an an bvious defect. Was there any evidence when you purchased ?? If you say not its and its repaired to same materials and finshes etc its likely to be a repair and be 2/3 deductible. The retaining wall is not a habitable area and forms a capital works / building construction costs just as a fence etc would. Non-deductible and potentially eleigible for 2/3 x 2.5% of the costs as a capital works cost.

How old is property ? If built after 1986 get a depreciation schedule and explain these costs to the qty surveyor so the report includes them.

 

[jaypee06]

Repairs vs improvement is a subjective area of tax so not all accountants will interpret and apply the rules the same way. Ask them both why they made that decision and see which argument you agree with.