Tax Effective Improvements/Repairs



From: Dan De Man

Hello All,

I am new to the forum and investment and hoping to get some insight into this area.

We recently bought a old unit using the 1st home buyers grant. The grant specifies that it must be our primary place of residence within the 1st 12 months.

Therefore we are renting the property and living with family, using the 1st 11 months rent to hit the loan.

We would like to make some improvements to the property, ultimately for our benefit and the enhance the properties value - new carpets, lights, oven, bench tops etc. At the moment we have great tenants who look after the place very well, and are accommodating and happy when I make these type of improvements/Repairs.

As I understand some improvements/repairs are tax deductible in the first year and others over 5yrs. Obviously in my case I would like to make as many improvements as possible that are deductible in the 1st year.

If anyone is clear on this issue and can provide further info and clarification I would be most appreciative.

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Reply: 1
From: Donna Larcos

You would need to check with a qualified
accountant. However, as I understand it,
the type of work you are considering
would be classed as a capital expense,
i.e. you are improving the property not
performing maintenance and thus would
not be tax-deductible, (maybe depreciable
for the year you are renting it).
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Reply: 1.1
From: Dale Gatherum-Goss


A lot will depend upon the facts of the matter. That is, what improvements (a dangerous word to use in discussions about tax) or maintenance is being done. Can any be blamed on the tenant? If so, then that portion can be claimed providing it is not a capital improvement and you are merely restoring the house to it's former state.

If you intend to live in the house within the year, then you will have very little tax advantage from those improvements anyway.

Good luck

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