Hi all,
Just wondering how do you determine whats a repair/maintainance and whats considered an improvement. I have recently purchased an IP and the shower screen glass is cracked and coming of the rails and the vanity is falling apart as advised by my building inspector. I was thinking of doing a whole reno on the bathroom rather then just fixing a few things. Would replacing the shower screens and vanity be classified as a repair and be tax deductible? And the rest such a retiling etc be classified as improvement?
All will be answered at the ATO website. The tax office has a wealth of info, including rulings, bullitins etc. And plenty of guides. SOme is open to interpretation (ie repairs Vs replacements/improvements) but most is covered for you. It may have been updated, but NAT1729-6-2006 is awesome for clearing things up. I sugges hi-liting stuf as you read thru.
All the best with your property.
if you have recently purchased the property and are renovating it , the general rule is that any work/installations will be regarded as improvements and can only be claimed over time as per the doc V8 states(logic is you knew the issues when you bought it so its not maintenance and not immediately deductible)
we are just finishing off a similar project, good luck with it
I'd agree with the above, it will have to be capitalised. To maximise your deductions, get a quantity surveyor on board asap to discuss the works, any possible write off of existing elements and the accelarated depreciation of the new fittings and fixtures.
What if I waited for the lease to end and the tenants to move out and then performed the repairs to the shower and vanity unit (not do any other renovations such as tiling etc)? Would that be classified as a repair to bring the bathroom back to a decent rentable condition?
I think generally, anything that brings the item to a state that is better than it originally was is an improvement. Anything that brings the item back to the same state is a repair.
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
Thanks guys.
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