Tax Deductability for Repairs

Hi All,

Anyone out of the rat race yet?

Anyhoo, I got a simple question base on the following points:
1. Purchased property < 12months
2. Currently living in it
3. Door lock breaks a few months after purchase and decide to not fix it until I move out
4. Rent out the prop. in the 13th month

If one were to repair the broken lock just before the tennant moves in and after I vacate the premise (say between the 12th and 13th month), would one be able to claim a tax deduction on that?

I'm sure all landlords have experienced this in one way or another

Any feedback welcome
Cheers

The tax law states that you cannot claim a deduction for damage that occurred before the property was available for rent.

This is what has lead to the misinterpretation of the law which says you cannot claim a deduction for repairs which occur within the first 12 months of purchasing (or converting to) an IP. The law doesn't actually say this - only that the fault must have occurred after it became an IP.

At the end of the day, a door lock is a pretty trivial thing - it's up to you to do the right thing by your conscience. Don't forget that the ATO is quite within their rights to query and investigate - and there are pretty hefty penalties for trying to obtain a benefit by deception.

The other thing to consider is that you need to make sure your property is in a rentable condition for when you tenant moves in. They are quite within their rights to insist that things like door locks are repaired before they move in.

question from wifey:
If instead of replacing a pane of broken glass, we instead replace with glass bricks, is that considered an improvement rather than a repair? If that is done after its available for rent, is that improvement a tax deduction?

cheers
the voigtstr

I would think this would definitely be classed as an improvement and would become a capital cost.

Is that deductable then, or would it be treated some other way by the accountant at the end of the financial year? (I suspect I'm asking for an explanation of capital cost?)

Depreciable over a period of time rather than claimable in the year the expense was incurred.

If the window was broken before the property became available for rent, it won't be claimable or depreciable at all.