Tax deduction for Repairs/ inspections of a purchased IP

[menty]

Hi all

I'm just wanting to clarify whether the following is tax deductible prior to the purchase of an IP

- Building and pest reports
- Lawyer fees
- Stamp duty
- Repairs/ improvements before the property is rented out (eg new shower/update kitchen/floorboards/paint, fixing leaking taps etc). Obviously some of these will be capital works deductions and others will be instant deductions (repairs?).

If not tax deductible, would be be more wise to wait till the new tenant moves in or until the property is put up for rent?

 

[Paul@PFI]

No to all the above.

Its worth finding a good tax adviser so that personal tax advice is always obtained. For example recording the CGT costs so that one day you don't overpay CGT. Also depreciation and Cap Allowance deductions you may miss.

 

[Bargain Hunter]

Repairs prior to letting will be a capital expense.

Repairs after letting are deductible in the financial year they occur.

If you purchase new appliances as part of the repairs these will generally fall within capital cost and are depreciable assets.

Reports fall within the acquisition costs. If you don't purchase there is no claim.

This is general advice, you should seek an experienced accountant to advise you on your specific situation.

Regards

Andrew

 

[Rob G.]

Repairs after letting are deductible in the financial year they occur.

Disagree with that statement.

They could still relate to a condition/defect that existed at acquitision and so classified as initial repairs which are capital.

Delaying an initial repair does not make it deductible.

 

[Paul@PFI]

Disagree with that statement.

They could still relate to a condition/defect that existed at acquitision and so classified as initial repairs which are capital.

Delaying an initial repair does not make it deductible.

100% agree. Every client I have told about initial repairs then asks if they can wait a few weeks then do the repairs. No.

 

[Terry_w]

100% agree. Every client I have told about initial repairs then asks if they can wait a few weeks then do the repairs. No.

But someone at a BBQ told me I can...

 

[Paul@PFI]

Its usually the brother in law.

Just a few days back I had an very adamant person who insisted that the amount paid on a home loan was the deductible. (P+I) "Been claiming it that way for years. My mate has been doing that way too. ATO hasn't knocked it back. YOU must be wrong. " Guy had the gall to think each extra repayment was an increased deduction.

I explained if he didn't want to amend to correct last two years I wouldn't do his tax. No way was I including loan repayment amounts. Answer ? No of course. So they walk away to meet another agent and likely to keep their mouth shut I guess ??

 

[Bargain Hunter]

Disagree with that statement.

They could still relate to a condition/defect that existed at acquitision and so classified as initial repairs which are capital.

Delaying an initial repair does not make it deductible.

Ok, I stand corrected and I'll never do it again