Question from Steven updated on 20th February 2013:
We have just re-piled a rental property that we have owned for a number of years. With the associated costs of reconnecting and repairs to plumbing, power, walls (chimneys removed) and floors etc. I assume I can claim the expenses to "make good". My question is about the re-piling itself. Can it be expensed or is it required to be depreciated? If depreciated then at what rate?
Our expert Mark Withers responded:
Because the work is work to the building the cost will be either fully deductible or alternatively a non-depreciate capital cost to the building now that buildings are non depreciable. The first step to determining the deductibility is to identify the asset so in this case it’s the building. It doesn't sound to me like re-piling would be considered an improvement to the building and would certainly not change the form or function of the building. I think you would be fairly safe to deduct it as a repair cost, especially where you have owned the property for some time.
Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.