Does storm water pipe and drainage pipe repair due to tree root went inside the pipe on investment property is repair expense for that year or will it be counted as depreciation expense/capital expense on Tax return?
If you just restores something to its original condition and don't improve or replace the whole structure or system, then it is generally treated as a repair expense (immediately deductible). However, if you enhance or upgrade the property beyond original condition or replace an entire structure (e.g., entire drainage system or entire pipe network), then it is capital works / improvements (not immediately deductible).
Thanks
Hi @Ary,
I just wanted to add onto @David-Nguyen post and provide some links to our website.
Repair and maintenance expenses has some really helpful info about repairs vs capital expenses along with some examples.
Capital Expense: If you replace the entire drainage system or make big improvements, it's a capital expense. Instead of claiming it all at once, you must spread the deduction over several years as a capital works deduction.
Repair Expense (Immediate Deduction): If the pipe is damaged and you fix it by clearing tree roots or replacing a small section, it's a repair. You can claim it as a tax deduction in the same financial year.
Thanks for the response. appreciated.
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