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Tax_Time(Initiate)Initiate
3 Jan 2024

Hi,


I'd greatly appreciate it if I could get some guidance on the following regarding some of my rental properties (none of them newly acquired so not initial repairs): 



  1. Replaced new gas hot water unit as previous one was old and faulty (about 12+ years old). Pilot kept switching off and couldn't produce consistent hot water
  2. Central heating unit replaced as couldn't be repaired as unit too old (kept blowing out cold air after switched off)
  3. Replaced parts of water pipes as it was corroded and dispensing yellow rusty water
  4. Replaced switchboard to be compliant to Consumer Affairs Victoria safety standards (to include circuit breaker and safety switches)
  5. Replaced part of gas pipe as wasn't compliant with Consumer Affairs Victoria safety standards (originally part of gas pipe was stapled along timber fence)
  6. Replace part of timber fascia roof due to water damage and erosion 
  7.  Replaced whole of veranda roof (same materials as previous) due to damage from hail storm

I'm thinking most are either repairs or maintenance as the replaced items were like for like, rather than replacing with something of a substantial improvement such as being more durable. What I'm most confused about are items 4 & 5, since they're expenses required by local Government regulations to ensure the safety of tenants.


Many thanks and much appreciated


MR

1,865 views
6 replies
1,865 views
6 replies

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Most helpful reply

CaroATO(Community Support)Community Support
3 Jan 2024

Hi @Tax_Time,


You're spot on!


Items on your list are either repairs or maintenance rather than improvements.


Once you've met the eligibility criteria you can look at claiming the expenses when you lodge your tax return.

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Most helpful reply

CaroATO(Community Support)Community Support
3 Jan 2024

Hi @Tax_Time,


You're spot on!


Items on your list are either repairs or maintenance rather than improvements.


Once you've met the eligibility criteria you can look at claiming the expenses when you lodge your tax return.

Bruce4Tax(Taxicorn)Taxicorn
4 Jan 2024

I have always treated # 1 and 2 as depn items.


Write off any unclaimed balance on the old unit, then claim depn on the replacement.


https://www.ato.gov.au/individuals-and-families/investments-and-assets/residential-rental-properties/rental-expenses-to-claim/rental-expenses-you-claim-over-several-years


# 4 is an improvement





Tax_Time(Initiate)Initiate
5 Jan 2024

Hi Bruce4Tax,


I originally thought items 1&2 were also treated as depreciable assets, however going back to the definition of capital improvement which refers to any works that improve an item/property beyond its original state. Since I'm replacing like for like (although brand new) rather than any significant upgrade, I didn't think it would fall under the definition of capital improvement (as capital works or depreciable asset). However, please do correct me if I'm wrong.


Also would #5 be outright deductible?


Many thanks , MR

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