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Re: Treatment of rental expenditure

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Newbie

Views 592

Replies 3

When my tenant moved out I repainted/repaired the interior and replaced damaged/worn vinyl and carpets. The intention was to rent the property again immediately but after the work was completed I decided to sell the property. How do I treat this expenditure incurred whilst a rental property considering the property is now sold.

1 ACCEPTED SOLUTION

Accepted Solutions

Best answer

Taxicorn

Replies 0

Any damage caused by the previous tenants can be included as an expense as a repair.

 

Any new/improved assets would be included in the cost base.

 

3 REPLIES 3
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Champion

Replies 1

Hi @SimonB 

 

Painting, replacing carpets and other repairs can be claimed as capital improvements thus affecting the base cost of the property.

 

I always recommend seeking proper professional advice for anyone dealing with a subject that could be the difference of thousands of dollars, which properties almost always do.

Best answer

Taxicorn

Replies 0

Any damage caused by the previous tenants can be included as an expense as a repair.

 

Any new/improved assets would be included in the cost base.

 

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Community Manager

Replies 0

Hi @SimonB 

 

You can immediately claim repairs and maintenance for wear and tear or damage to the property from renting it out. 

 

When we say 'repairs', we mean work to make good or remedy defects in, damage to or deterioration of the property, for example:

  • replacing part of the guttering or windows damaged in a storm
  • replacing part of a fence damaged by a falling tree branch
  • repairing electrical appliances or machinery.

When we say 'maintenance', we mean work to prevent deterioration or fix existing deterioration, for example:

  • painting a rental property
  • oiling, brushing or cleaning something that is otherwise in good working condition
  • maintaining plumbing.

You can't claim the total costs of repairs and maintenance in the year you paid them if they didn't relate directly to wear and tear or other damage occurring due to renting out your property. These could however be included in your cost base when you calculate your CGT.