Announcements
We’re in read-only mode while we do some scheduled maintenance to bring you a bigger, better and brighter online community.
You can still search the site to find answers or take a look at our current top 10 questions.

ATO Community

Tenanted Rental Property: immediate deduction for replacement cost of appliance

Newbie

Views 3403

Replies 4

In 1980s my family started to own a residential property, which was located in NSW, already tenanted and equipped with a gas stove then. In 2014 some moderate refreshing works, including repainting its interior walls and cabinets, etc were carried out; during the few months it could not be rented on consideration of the environment like a works site. After works completion, it was again rented out until present.

 

Early 2018 our property agent advised us of the malfunctioning of the gas stove there; further they sent a tradesman for inspecting the item. As a result, this could not be repaired to a general extent that all major functions being restored, a replacement was inevitably installed this May. For the tax year 2017/18, would you please advise us whether we are allowed to claim immediate reduction of the replacement cost in full, i.e.,$990. 

 

Thank you for your assistance in advance.

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Certified Response

Anonymous

Replies 0

Hi @G_Sep_2018

 

You can not claim an outright deduction for the Stove because it is considered to be a "capital cost", refer page 16 under repairs and maintenance of the ATO guide for rental property owners.

 

However, you can depreciate the Stove over a number of years, refer to the ATO guide for depreciation assets.

 

ATO 13 28 61

4 REPLIES 4

Most helpful response

ATO Certified Response

Anonymous

Replies 0

Hi @G_Sep_2018

 

You can not claim an outright deduction for the Stove because it is considered to be a "capital cost", refer page 16 under repairs and maintenance of the ATO guide for rental property owners.

 

However, you can depreciate the Stove over a number of years, refer to the ATO guide for depreciation assets.

 

ATO 13 28 61

Newbie

Replies 2

Thanks for your quick response. However I made an inadvertent mistake about the type of equipment in my message yesterday. It should be a "chef gas range" instead of "gas stove". The range is some sorts of slightly medium rank 's oven, acquired on 27-3-2018 instead.  In this regard, please let me know:

 

a) whether that item is considered also to be a "capital cost"; and 

 

b) whether it would be allowable for me to depreciate that item over 5 years by a prime cost method. This is in view of the fact that for my home here in recent three years, 2 new electric ovens had, one by one, been acquired to replace an earlier one. Though well known brand,  we got to get rid of them upon their rapidly being out of order. 

 

 

By incorporating the amendment, my message's affected portion should read as: 

 

In 1980s my family started to own a residential property, which was already tenanted and equipped with an oven stove then. In 2014 some moderate refreshing works, including repainting its interior walls and cabinets, etc were carried out; during the few months it could not be rented on consideration of the environment like a works site. After works completion, it was rented out until present.

 

Early 2018 our property agent advised us of the malfunctioning of the oven  stove  there; further they sent a tradesman for inspecting the item. As a result, this could not be repaired to a general extent that all major functions being restored, a replacement was inevitably installed on 27-3-2018  this May.    . . . . . . . . . . .

 

 

Anonymous

Replies 1

@G_Sep_2018

 

1/ It is still considered a " capital " expense.

 

2/ The effective life of an oven is what the ATO determines the effective life to be, not what you consider it to be, which in this case appears to be 12 years. https://www.ato.gov.au/Forms/Rental-properties-2018/?page=16

 

you also need to keep in mind that you can no longer claim depreciation on second hand items unless they are excepted items, as per the guide that has already been provided.

 

 

Newbie

Replies 0

Thanks for your useful advice.