I have a rental property that is currently tenanted. 2 trees are required to be removed.
Tree 1: The roots are starting to interfere with the plumbing
Tree 2: Tree is starting to grow through the power lines, and I have been advised is causing a risk to tenants and structure.
The cost to remove these 2 trees are substantial. Please advise if I can claim these as an instant deduction due to the reasons of removal
Generally the removal of trees is a capital expense and can't be claimed as a tax deduction. (it would be part of the cost base on disposal of the property). Where tree removal can be claimed as an immediate tax deduction depends on a number of factors.
First consideration is whether the trees posed a risk when you purchased the property. If they did then it is a capital expense as this is considered removal work needed at time of purchase.
Another consideration is whether the trees became diseased or infested since you have owned the property. If they are then the removal may be deductible.
If the risks as you outlined developed while you owned the property then it is the scope and severity of the risks that is considered.
If the tree roots are causing active damage to the plumbing then the removal may be a deductible expense. Some documentation from a plumber would be advisable to have. If the tree is healthy and might cause damage, then it is not deductible.
If a tree removal is necessary to address a risk to your building or the tenants then it may be deductible. You would need to have documentation to show that this is the case if you claim.
It is a case by case determination. The only way of receiving an ATO binding answer to your specific situation is to request a private ruling
Private rulings | Australian Taxation Office
22 Apr 2024 · 6 min read time
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