Claiming insulation for creaking floorboards?

Question from Melanie updated on 3rd September 2013:

I live in a home and income with no insulation between our house and the flat below (so a lot of noise carries). Part of the noise is our creaking floorboards above. We’re intending to remove the downstairs ceiling and install insulation, and at the same time have the creaky floorboards attended to (though this is a minor part of the work). Can this be considered maintenance and claimed as an expense?

Our expert Mark Withers responded:

There are two issues to consider with this, firstly you need to demonstrate a nexus with income, private expenditure on your home being non-deductible. It certainly sounds like the benefit of this work will accrue, at least in part to your own residence and so is non-deductible to that extent.
The second question is whether the expenditure is capital in nature. To determine this firstly identify the asset, that would seem to be the building. Then determine whether the nature of the work goes beyond general maintenance. In this case, where there is clearly no insulation or sound proofing between floors and the work is not required as a result of tenant wear and tear it seems to me that you would be hard pressed to convince IRD that the work is anything other than an improvement to the home and capital in nature. Accordingly I believe it to be non-deductible and non-depreciable.

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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