Repair deduction options

Question from Razzi updated on 5th August 2019:

I have bought a property to rent it out. I had a full building inspection done prior to purchasing the property and it said all it needed was a minor renovation to refresh the place, with some repairs and maintenance. But it turned out the whole roof needed to be replaced. Then, once we ripped the lino off the floors we discovered the piles in the back part of the house were rotten and needed replacing. Also, some floor boards had bora and just fell through. Can I deduct piling portion and floor replacements and the whole roof replacement as repairs and deduct it in my tax return?



Our expert Mark Withers responded:

Had you owned the property for many years this type of expenditure on the building would typically be maintenance. However, where its the remediation of pre-existing faults that were present at acquisition and are fixed prior to the property being rented they will be considered non-deductible dilapidation repairs and should be capitalised to the building cost rather than deducted as repairs and maintenance.



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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