Claimable repairs?

Question from Shirong updated on 4th December 2017:

While in the process of renovating a kitchen and bathroom, I discovered that there was a foundation issue. I spent some considerable sums replacing piles that had failed (two rows out of 6 ). This lead to issues like linings cracking and windows breaking so I had to redecorate internally as well as replace the kitchen and bath that I had removed. Is this a capital expense or is any of this claimable on income?

Our expert Mark Withers responded:

The answer really depends on where you are in the ownership timeline in my view. If these things were discovered immediately after acquisition they are dilapidation repairs that would be capitalised as required to bring the property up to a let-able standard. If, however, you have owned the property for a number of years and have been renting and declaring income through this time they are really just normal costs of maintaining a building and repairs to the building in this context are deductible.

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.

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