Tax deduction while repair/reno IP ...

[bennido]

Hi all,

A tenant will be vacating my IP soon and I plan to do some repair work as well as a bit of renovating.

I have a full time job so I expect everything to be in about 2-3 months.

Would I be able to claim tax deductions (e.g. loan interest) for the repair/reno period even though it is vacant for a while ?

I won't be living in the IP and intend to rent it out once the job is done.

Thanks in advance !

 

[devank]

I’m not a tax man but I think if the property is available for rent then you can claim it.

 

[Mry]

As long as you intend to rent it out once the renovation period is over, you can claim deductions relating to your ownership in the property eg interest, rates and insurance. See the case Ormiston vs FCT.

 

[bennido]

Thanks all .. I wasn't sure if all the running costs were deductible as some of delay is due to capital improvements (and not repairs due to renting it out).

 

[RedPanda]

I think you'll get different answers on this one.

One interpretation: Since the property isn't available for rent while you are doing reno, the loan interest is not tax-deductible.

Other interpretation: Since the intention is to rent it out, they are tax-deductible.

I'd say, ask your accountant and go with it.

 

[Rob G.]

I think you'll get different answers on this one.

One interpretation: Since the property isn't available for rent while you are doing reno, the loan interest is not tax-deductible.

Other interpretation: Since the intention is to rent it out, they are tax-deductible.

I'd say, ask your accountant and go with it.

I kind of like the interpretation of the majority of the Full High Court in Steele's case. Nothing about availability there, just a clear purpose.

Cheers,

Rob