So my rental property was damaged in a fire and the insurer fixed it at their cost.
But they didn't do a great job. We contested their efforts and they agreed to give us an additional payout of $100K.
We have decided to NOT spend that money on the house but rent it out as is.
My questions are:
Insurance payouts for repairs need to be included in your income. See this link on damaged and destroyed property.
Tax time toolkit for investors | Australian Taxation Office
Can't comment on question 2. Not sure what you are alluding to.
Insurance payouts for repairs need to be included in your income. See this link on damaged and destroyed property.
Tax time toolkit for investors | Australian Taxation Office
Can't comment on question 2. Not sure what you are alluding to.
Thanks for responding.
The house was not very old and there were Capital Works damaged in the fire - kitchen fitout, lounge and bedrooms.
These Capital Works were disposed of and replaced by the insurer.
When Cap Works in a rental property are disposed of, it's my understanding that the written down value of them can be claimed as a deduction.
But I wonder if this is possible given the insurer fixed everything up?
If capital items are scrapped then the written down value can be claimed as a deduction. This is generally offset by any insurance payout you receive, but in your case these were replaced or repaired by the insurer. It may be worthwhile to see an experienced tax accountant for your next tax return so as to make sure you can obtain the best tax result for yourself.
Thanks for responding.
15 Apr 2026 · 4 min read time
15 Apr 2026 · 8 min read time
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