Loading
Buja79(Newbie)Newbie
5 Sept 2025

Hi team,

I have a property, which has been rented continuously since 2016. We have incurred structural problems with the building over the last couple of years and strata commenced substantial remedial works in April 2024.

My tenant moved out in April 2024 and the property was not genuinely available for rent until the beginning of June 2025 (following completion of all remedial works). Tenants moved in towards the end of June 2025.

I understand I am able to claim interest, council & water rates etc during the renovation period. I wanted to know if I am able to claim full depreciation on capital works and cost of repairs incurred during the entire 2025 year.

Thanks.

236 views
8 replies
236 views
8 replies

All replies

YEP(Devotee)Devotee
5 Sept 2025

1/ You can not claim any Interest, council & water rates during the renovation period because the property was not rented or genuinely available for rent, this is clearly on the ATO website. Those expenses will form part of the cost base for CGT purposes.


You will only be able to claim those expenses for the time period the property was rented or genuinely available to be rented.


Types of rental expenses

You can claim a deduction for certain expenses you incur for the period you rent your property or it's genuinely available for rent. 


https://www.ato.gov.au/forms-and-instructions/rental-properties-2025/rental-expenses


ATO also have an interpretive decision on this issue, and whilst the circumstances are not the same the princplies still apply.


https://www.ato.gov.au/law/view/print?DocID=EV%2F1052075521650&PiT=99991231235958



2/ YES. You are able to claim full depreciation on capital works and cost of repairs incurred during the entire 2025 year as the capital works are finalised.






Liked by Buja79
Buja79(Newbie)Newbie
8 Sept 2025

Thanks for your response.


Interestingly, the ATO website states the following within the link:

https://www.ato.gov.au/forms-and-instructions/rental-properties-2025/rental-expenses


"You can claim expenditure such as interest on loans, local council, water and sewerage rates, land taxes and emergency service levies you incur during renovations to a property you intend to rent out."

This is stated under the heading of "Expenses before the property is genuinely available for rent" so perhaps this rule only applies to period between property purchase & rental. Strange that the character of this rule does not apply to the entire life of the rental property.



YEP(Devotee)Devotee
8 Sept 2025

@Buja79


That only applies for renovations that take a short period of time, up to 4 weeks.


Refer to TR 2023/3 - Para 60 - " Example 14 – short absence to undertake repairs "


60. Mohammad owns a residential rental property that he constructed on land that he holds. The tenants vacate the property leaving minor damage to some of the walls and fixtures. Mohammad is keen to maximise the amount of rent from the property and decides to repair the damage to the property before relisting it for rent. The property is off the market for 4 weeks while the repairs are undertaken. Mohammad's intention is always to lease the property and his holding costs remain deductible under section 8-1. This short period of vacancy is a normal incidence of the transition between tenancies. In these circumstances, we would not seek to apply compliance resources to determine whether subsection 26-102(1) applies to deny Mohammad's deductions for holding costs during the vacant period.


https://www.ato.gov.au/law/view/document?docid=TXR/TR20233/NAT/ATO/00001



They really should clarify that so it aligns with what they have in their own ATO ruling ...


Taxduck(Taxicorn)Taxicorn
5 Sept 2025


According to the ATO you can't claim rental expenses

So holding costs and loan interest aren't tax deductible during the renovation period.

Rental expenses | Australian Taxation Office

They would be included as part of the cost base.

Cost base of assets | Australian Taxation Office

Depreciation on the capital works undertaken would not be tax deductible until the works were finished and the property was again genuinely available for rent.

The only possible deduction you can claim as a tax deduction during this renovation period is the interest on any money borrowed to pay for the renovations.

See below

Interest expenses | Australian Taxation Office

Liked by Buja79
YEP(Devotee)Devotee
5 Sept 2025

"The only possible deduction you can claim as a tax deduction during this renovation period is the interest on any money borrowed to pay for the renovations."


The above interest would be subject to the same rules as any other interest payable or other expense, as they are all treated the same under the rule of, "if the property is rented or genuinely available for rent", and accordingly interest on funds borrowed to carry out repairs under these circumstances only becomes deductible from the time that the property is rented again or becomes genuinely available for rent again.


If you have any other thoughts or references I would like to hear them

YEP(Devotee)Devotee
6 Sept 2025

@Taxduck Without going into detail -


That does not apply to this situation because of the length of time taken to undertake repairs / renovations. Interest on construction is totally different.


In the post you linked TR 2023/3 is mentioned have a look at Example 14 – short absence to undertake repairs Para 60 it will put it all into perspective.


Also have a think about all those interpretive decisions like the one I linked. The ATO have stated in those that taxpayers are not entitled to claim interest or anything else for a reason including their circumstance and they would not be able to do so if there was a public ruling that stated otherwise.


No one can claim any interest or other expenses when the repairs or renovations on an investment property take more than just a short period to complete if the property is not rented or not available for rent during that time period.


Featured articles

Renting out all or part of your home? What to include in your tax return

15 Apr 2026 · 4 min read time

How to work out your tax residency

15 Apr 2026 · 8 min read time

Top liked users

  1. Taxduck

    (Taxicorn)

    1262 likes

  2. Bruce4Tax

    (Taxicorn)

    1115 likes

  3. YellowPotato

    (Taxicorn)

    332 likes

  4. Ken_Oath

    (Master)

    199 likes

  5. knaresbro

    (Devotee)

    139 likes

Top contributors

  1. Bruce4Tax

    (Taxicorn)

    3394contributions

  2. Taxduck

    (Taxicorn)

    2800contributions

  3. YellowPotato

    (Taxicorn)

    873contributions

  4. knaresbro

    (Devotee)

    294contributions

  5. TobyJDodd

    (Devotee)

    176contributions

Loading
Can I deduct repairs/depreciation if property only available for rent for 4 weeks? | ATO Community