Hi All,
I've living in a townhouse which I'll eventually rent out. It's quite a nice place. I'm looking at putting in built-ins and air-con etc. My question is this-should I do the reno now while I'm in here? I've been told by my accountant that i should wait till i get tenants in for tax purposes. But can't i just claim that through the depriciation schedule?
Thanks
LuciaMadness to do it now as you wont get a red cent from the tax man.
Once you have rented it out for over a month then do any work you need and its classed as new capital improvements and depreciable on your tax. A good trick with air cons is to get one invoice for the unit and another for installation and labour. Installation and labour can be claimed 100% in the year you do the work and the unit cost if under $1000 can usually be written off immediately as well as it would be classed as being in a low cost pool for depreciation purposes..
Any major improvements or capital expendature is claimable on depreciation, but only over 40 years and at only 2.5%/yr.
Hope this helps.
DD
It certainly makes sense. Thanks heaps DD.
You could put the tenant into the property based on the promise that you will put aircon into the property once they move in making the property easier to rent out. Then look at doing more work later on.
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Hi Omiy,
You are not talking about a major renovation here … just an air conditioning unit and built ins … I personally think it comes down to personal comfort … If those items would improve your standard of living today then go stick them in … If you were doing a major renovation such as painting, new kitchen, new bathroom & new flooring my opnion would be to wait.
That is my 2 cents worth.
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Thanks all for your valuable advice. Jason is right…I am thinking about my own comfort. The bathroom will need work be done before we rent it out as there's a small leak somewhere in the water pipe of the toilet. I don't think the tiles were done properly by the previous owner. Water must be sipping through as the paint on the outside walls of the bathroom started to peel. I don't mind people doing improvements on the house themselves but do it properly!
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