All Topics / The Treasure Chest / a straightforward question (i think)

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  • Profile photo of richmondrichmond
    Join Date: 2003
    Post Count: 831

    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…


    Profile photo of johndjohnd
    Join Date: 2003
    Post Count: 25

    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.

    Profile photo of jempirejempire
    Join Date: 2001
    Post Count: 19

    Yes, Johnd is correct.

    Consult your accountant regarding this advice.


    Profile photo of DramDram
    Join Date: 2003
    Post Count: 82

    I’m no tax guru, but I found this on the ATO site…

    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.



    Here’s a bit more info…

    The following link is to Tax Ruling 97/23: Income Tax – Deductions for Repairs. Check out Example 13 at Para 177.


    Profile photo of AndrewSAndrewS
    Join Date: 2002
    Post Count: 6

    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.


    Profile photo of JetDollarsJetDollars
    Join Date: 2003
    Post Count: 2,435

    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.


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    Profile photo of spider_2spider_2
    Join Date: 2003
    Post Count: 79

    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!

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