Did you know during a financial year, if repairs have been taken out on your investment property, you as an investor, could claim these costs as a 100% deduction?
However, you must be careful when claiming an expense as a repair and not as an improvement. Here are the differences…
Repairs & Maintenance:
If there has been work to restore an item to it’s original condition due to tenant wear and tear, then this is tax-deductible, as long as it’s not “initial repairs” – damage that existed when the property was first purchased.
For more clarification, partially replacing broken gutters plumbing would be classified as a repair. Maintenance is simply work completed to prevent or fix existing deterioration. Eg. Servicing a heater, clearing out a blocked drain, etc.
Both of these expenses that you as an investor have incurred, can be completely claimed in the financial year that they occurred.
The cost of restoring an item over and beyond its original condition would normally constitute an improvement.
Improvements generally are when an item is completely replaced or has been added to the property. Often the improvement will extend the functional life of an item and changes it’s original style and look – for example a brand new kitchen.
Such costs may be eligible for a depreciation or capital works deduction.
Tax-deductible repair costs that are not attributable to initial repairs include fixing a leaking tap, repainting damaged walls, replacing damaged guttering, or fixing a showerhead that is broken. An example of an improvement is replacing a wooden kitchen bench top with a granite bench top and adding an island bench as well.
Always double check with your accountant on what you can and cannot claim.
If you are requiring any RTL plumbing repair and maintenance work on your investment property before the end of financial year please contact us on (07) 3399 2203 or fill in our online enquiry form and we’ll happily assist you in your repairs before 1st July, but hurry end of financial year is almost upon us.