Hello,
How can I renovate a unit if the ATO does not allow me to claim capital expenses such as installing a new kitchen unless the old kitchen is in need of repair (it’s not – it’s just old)? Please advise.
Col
Hi Col,
There is more to renovations than tax savings. Renovations should be considered as a means of creating 'instant' growth, increased rental returns and/or as a means of staying on top of your properties needs. To me taxation is a supplementary benefit.
From a purely tax saving perspective while the costs of the renovations are not 'deductible' they are 'depreciable' at 2.5%/annum over 40 years. Deductions are only permissible for repairs – that is making good as distinct from upgrading.
Many thanks Derek for your advice. I've just spent 4-5 hours on this website researching & reading advice…so much to learn.
All the best!
Col
You can claim virtually everthing. How you claim depends on whether a repair/improvement or a capital item etc. Some things can be claimed in full in the year of purchase, others you need to depreciate over a few years.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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