Rental Example:
Fixing broken glass on a window is considered a repair.
Replacing the whole window frame is an capital improvement which will be depreciated at 2.5%
Repairs made immediately after purchase of the investment property or maintenance to make the property suitable for rental are considered to be of a capital nature - part of the cost of the property and can be depreciated.
They are not deductible as ATO considers the lower price of the property reflects its state of disrepair.
The ATO is particularly vigilant in catching people who are claiming expenses described as repairs when they are considered to be improvements.
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INTEREST
Loan a/c fees on loans to finance investment properties.
o For the interest to be deductible the
loan must have been applied to
acquire an income producing asset
rental property
o Where loans used for both investment
property and private assets the
interest has to be apportioned based
on how much of the principal was used
for which purpose. This usually
happens when people are using a Line
of Credit facility
SEMINARS
The cost of attending property investment seminars – only to the extent that they relate to operating or maximizing the return on currently owned properties.
o Where money is spent on relevant
seminars before any property is
acquired, there will be no deduction
available.
Quantity Surveyor’s report
The cost of preparing a report showing depreciation expenses and Special Building Write-off.