Forums / Property Investing / Help Needed! / Deductions on Investment Property….Termite treatment, fence?

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  • Profile photo of salgsalg
    Join Date: 2005
    Post Count: 7

    I am very new to all of this and have just signed a contract on my first property. It will be rented back by the owners for about 3 months until they move into their new place. After that I will live in the property for a while, but it will probably become a rental within a few years (especially if interest rates go up!) so I can pay it off faster.

    The property has been completely renovated so nothing at all to do except that it is a corner block with no fence. I would like to put a fence up, mostly so that it will appeal to more tennants – what good is a 600sqm block without a fence for kids or pets? And also, I currently live in the same street and know that white ants/termites have been working their way through the houses. This house appears fine so far, but I would like to consider getting a chemical or barrier treatment done on it so it doesn't cause problems later.

    I know I can't claim anything while I am living in it, but when rented – can I claim fencing the property as a tax deduction if it is so that it will suit a broader range of tennants? I doubt it, but wanted to check with people who might have some idea. And, can I get a termite treatment/barrier done and claim it as a deduction? Can you claim pest inspections while it is rented?

    And lastly on the fencing issue – anyone know what the cheapest form of fencing is….I'm looking at about 60m at least, not counting replacing the old rusty fences between the neighbouring properties.

    Thanks for your help!

    Profile photo of ducksterduckster
    Join Date: 2004
    Post Count: 1,673

    Fences can give you a real headache when dealing with neighbouring fences as usually the neighbour pays half. If your neighbour is not a rich landlord I would suggest getting quotes done for a fence and then providing it to the neighbour. Once the neighbour gets over the shock of having to pay out money they were not expecting they might be happy to pay for their half share. This took 12 months for my neighbours to shine to the idea of replacing the fence when I replaced the rear fence with a wooden fence my share cost me about $770 but murphy's law came into effect and the one remaining tree in my backyard that had never dropped a branch in 15 years on the old fence dropped a branch onto my new fence so I had a quote of $1000 to fix it. $400 for the tree and $500 to repair the fence.
    If the fence job is small you might get hit with an extra small job fee.

    You can claim the fence, the question is as what type of expense it is as it is a grey area of tax law
    You purchased the property with a poor fence and so the new fence is an improvement rather than a repair.
    So you can claim it as a depreciation expense. In simplier words. You can claim part of the cost by the (fence cost / effective life years) each year of the effective life of the fence. (effective life is decided by ATO for each type of item)
    Even if you do the fence as a ppor and rent it out later you can portion the effective life to two parts. Private use time – no claim
    and then investment use = effective life – private use life (calculated by days depreciation cost * private / total days in year)
    same with getting a chemical or barrier treatment it would have an effective life for depreciation.
    Not sure on the pest inspection situation it might be an expense if the property is currently rented but if done during PPOR I think it would be non claimable private use. Other forumites might have a better view on this than I have.
    A quantity surveyor would be able to calculate a depreciation schedule for your accountant.

    Profile photo of Property GuruProperty Guru
    Join Date: 2009
    Post Count: 5

    Get a quantity surveyor report done. If your accountant says he/she can do it for you get another accountant.  Make sure your accountant has investment properties as then you both have an interest and your accountant will be up to date with everything regarding investment properties as it will effect him/her as well. Depending on the age of the property, if build earlier than 1985 you can not depreciate the building but will be able to depreciate the renovations and further improvements.

    Regarding fence, my thought are much the same as the comment above from duckster.

    Profile photo of salgsalg
    Join Date: 2005
    Post Count: 7

    Thanks for the replies. So I would need to put up the fence and get the termite treatment done and then get a quantity surveyor to do up a depreciation schedule? The house I bought has just been fully renovated so it might be worth it? And I have to get an accountant obviously – up to now I have done all my own tax stuff, but it has never had any kind of complicated investment stuff involved I guess. (but property doesn't settle till july so I have some time) 

    Can anyone recommend a good quantity surveyor/depreciation schedule company in Brisbane (northside)? (Or an accountant for that matter!)


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