Hey
This is a very basic question I'm sure but I'm no tax expert. Are all renovations on an investment property tax deductable? I am talking about replacing a kitchen sink, new carpets, new interior paint, new grill, plumbing and termite treatment?From what I have read – if you do the renovations prior to renting the property out they are not a tax deduction they are increased capital which you wouldn't get the advantage until you sold the property.
If you have rented the property out and then did the renovations and then rented out again I believe the renovations are tax deductible.
You would be best to check with your accountant though.
Linda
The cost of "renovations" as a general rule are only tax deductible when you sell the property. This is because they form part of the cost base of the property. However, you can write off the cost of the renovations at the rate of 2.5% per year. This is known as claiming a "capital works" deduction, which is a similar concept to "depreciation". I wouldn't just spend money on the property willy nilly and hope for the best, I suggest that you run it by your accountant, before putting your hand in your pocket.
Renovations are certainly deductible. But when and how is the question, and this depends if it is a repair, a part of the building works or an improvement etc.
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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