a straightforward question (i think)

Viewing 7 posts - 1 through 7 (of 7 total)

richmond
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@richmond
Join Date: 2003
Post Count: 831
July 8, 2003 - 12:50 pm
what is the tax situation if i have bought a house with some minor leaking issues in the roof and get it fixed? I would have thought that it would come under repairs, so the whole deduction is allowed, even if it’s around the $5k mark? any tax gurus out there? i want to let it go for 12 months (building inspection guy said it would be okay) then get it fixed next may/june and claim it straight back…
cheers
r
johnd
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@johnd
Join Date: 2003
Post Count: 25
July 8, 2003 - 12:59 pm
Hi Richmond,
I’m no tax guru so make sure you check with your accountant, howeverif the roof is leaky and requires repairs then definatley it is a total deduction, to make absolute certainty beyond a shadow of a doubt have the company doing the repair to state something like “Replacement of existing leaky roof with New Roof” on the invoice.
regards
John
jempire
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@jempire
Join Date: 2001
Post Count: 19
July 8, 2003 - 1:04 pm
Yes, Johnd is correct.
Consult your accountant regarding this advice.
Shane
Dram
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@dram
Join Date: 2003
Post Count: 82
July 8, 2003 - 1:13 pm
I’m no tax guru, but I found this on the ATO site…
http://www.ato.gov.au/content/individuals/downloads/NAT1729-03.pdf
Has the property been rented since you bought it? If not, and the repairs are to bring the property up to an acceptable standard to generate income, then it appears there is no deduction. Instead it could be a capital cost which you could depreciate.
Cheers

Edit
Here’s a bit more info…
http://www.ato.gov.au/content.asp?doc=/content/Individuals/31258.htm&page=1#P187_17695
The following link is to Tax Ruling 97/23: Income Tax – Deductions for Repairs. Check out Example 13 at Para 177.
http://law.ato.gov.au/pdf/tr97-23.pdf
Cheers
AndrewS
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@andrews
Join Date: 2002
Post Count: 6
July 8, 2003 - 3:35 pm
Ask your accountant but I think its capital improvement as the fact that the roof leaks would have decreased the purchase price of the property and you are now just bringing it up to an acceptable standard.
There should be enough upside to R/E investing that you do not not need to get into any grey areas regarding tax. Watch out for tax audits.
Andrew
JetDollars
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@jetdollars
Join Date: 2003
Post Count: 2,435
July 9, 2003 - 12:08 am
if the repairs is between tenants then this will be a deduction under repairs and maintenance, but if the repairs just after you bought it and there are no tenant yet, then it is capital improvement.
chan$
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$ One problem solved! $
$ Next problem arrive! $
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spider_2
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@spider_2
Join Date: 2003
Post Count: 79
July 9, 2003 - 10:22 am
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I’m pretty sure that it has to have been rented/ earning income for you before you do any major repairs. We try to have a property earning income for 12 months before doing any major work. Check the ato site – it is good, and the free books available are great references!