Tax Deductions?

[Pesty]

Hi everyone, just a couple of queries regarding deductions for an IP. As the ATO site only states the word 'insurance' as a legal deduction, does that include Buildings/Contents or just the Landlord Insurance? Also, while still living in our IP (as PPOR before we moved out) our air con caught fire, so we had to purchase a new unit. This was December 2008, our property was on the rental market from March 2009 and wasn't tenented until May 2009. Is any of the purchase cost of the $3600 air con deductable as capital works/repairs/maintenance etc or not? Our accountant had told us that we would get a portion of capital works deduction, however this didn't happen when our tax was done. All we got 'back' was our interest, rates, landlord insurance etc. I'll be making sure everything is accounted for this year!

Thanks,

Nicki

 

[dr.jauncey]

Hi, yes, both landlords insurance and general insurance for the property should be deductible.

If the property was available and advertised for rent in March 2009 then this is the time that the tax office will consider it to become a rental property. So this is also the date from which you can start claiming deductions. This will include depreciation on the written down value of the fixtures and fittings of the property. Beyond claiming depreciation on the remaining value of the air conditioner you may like to consider purchasing a depreciation schedule to outline to value of other items in the property including (potentially) the building itself. You can then ask your accountant to lodge an amendment to your 2009 income tax return based on the contents therein.

 

[Pesty]

Yes that's right, I do remember him mentioning depreciation and the like. We also replaced the carpet in the loungeroom as preparation for rental as well. The property is 8 years old, so would a depreciation schedule be beneficial then?

Regards,

Nicki

 

[dr.jauncey]

Hi, yes, if you have kept records for the carpets as well as that air conditioner per the previous post then you could claim depreciation on the remaining value on both.

A property that is only 8 years old should also have significant value to be claimed over the next 32 years. I would recommend organising a quantity surveyor report before the end of this financial year. Consider organising it sooner if you plan to submit an income tax variation for the remainder of the current financial year.