Repair or Improvement

We have an investment property with an electric hot water system which has been repaired a couple of times. If it fails again we will replace it rather than repair it.

If we were to replace it with a solar system does anyone know if this would be considered a replacement or an improvement for tax purposes? Although this would be more expensive initially I think it is the way to go in Queensland and it should have a longer lifespan than an electric model.

Unfortunately, Coops, it would be classed as an improvement, as you are not replacing like with like. Naturally, speak to your accountant to clarify this but a repair is considered replacing something to the original state in which you purchased it. In your case, this is clearly not what you are doing, but the long term benefits of solar over electricity are measurable by the amount of money you (or in this case, your tenants) will save