I was told not to do any repairs to my new investment home until i’ve owned it for more than a year, or I wouldn’t be able to claim on a tax deduction on them. Is this right??
I’m in South Austrlia if that makes a different.
thanks
David.David,
I am currently in my final semester of a commerce degree from Deakin university, majoring in commercial law and thus have done a number of units relating to taxation law.
And in my limited exposure (as in not yet actually practicing this) to this topic I can see no reason why you wouldn’t be able to deduct any repair expenses within your first year. The tax legislation simply states you can deduct any outgoing (expense) to the extent that it is incurred in gaining or producing your assessable income. I also don’t know of any specific provision of the act which specifically prevents you from deducting it. So to the best of my knowledge if you are currently receiving income form this investment property you should be legally allowed to claim these costs as deductions.Another point is that in regard to a number of properties which my folks and I hold, we have made repairs within the first 12 months and deducted against assessable income.. maybe we have a very creative accountant..
Was their any specific reason given as to why couldn’t claim a tax deduction? As every circumstance is different. Also was it an accoutants advice?
Hope this helps.
Peter Williams
I’ve heard the same thing before- the theory is that if you make repairs in the 1st year they will be treated as a capital cost, & hence you can only depreciate the cost versus claiming it outright as an expense. I guess the theory is that you’ve purchased it “broken”, and that’s reflected in the purchase price. I can be very wrong on this issue though.
Cheers [
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WeiHi All
With all things taxation ‘you can claim anything’ and it may not be picked up on your tax return that it is not a permitted item but for 5-7 years the department can revisit this return and question any item.
So just because you managed to claim something does not qualify an item as a valid claim.
In relation to claims anytime my believe is that only repairs to the same state are allowed, any other repairs are classed as improvements and then need to be depreciated. Naturally the interpretation is open and many things can be claimed but aqgain the 5-7 year review is always there.
A further twist in this tale is the need for the property to have generated income before any money is spent on the property otherwise this does fall into the capital improvement catagory.
This is my understanding of the tax rules.
ziz
Edited by – [email protected] on 11/08/2002 11:35:03 AM
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