OK I live in my PPOR and have $3000 worth of enforced window replacement costs coming up by the body corp. The windows are in a bad shape, with rotting wood frames etc… Two questions;
1. Are these repairs expenses or capital expenditure ?
2. If I advsetise my flat now for vacancy next year, can I claim the the costs against my income tax.
Thanks
DaveIn my opinion:
1. Repair.
2. No. It is not an income producing asset at the time the repair is being made.Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auThanks Stu,
Now re; item 2. I thought I heard that when buying a property, so long as your intention is to rent it out, you could claim expenses before you actually get the tenant. i.e. if you showed proof that you intent the property to be available for rent, such as by placing an add in the paper etc…
That said I do see your point, which I expect is correct.
Now having said that, what if I immediately sought an advanced rental payment of 1 months rent, to secure rights to rent my property on 1 Jan 2004. Thus my asset has produced income. Would that change anything ?
Or say I sought a monthly payment to secure rental rights from 1 Jan 2004. Say $100 per month.
Say now someone became interested and agreed to make these payments in anticipation of securing rental in 2004
Now again my asset is producing income isnt it ? And thus I could then claim any expenses incurred from now to 2004 against that income ?
Thanks
DaveDave,
In my opinion you try to rip ATO off. I think people like you give a very bad impression about IP investors.
Why not claim from tax your car purchase and repair, service etc. And furthermore how about your holiday expense, clothes and why not your day to day expense.
Basically you have no idea how the tax system works. Doesn’t it?
Sorry to be bit harsh mate. But I am not sure you are kidding or not.
Ta, Paul
I’ve done tax law and…
1. I think its a capital expense (new windows) and $3000 worth. Maybe if the new windows were 1000 you could say it was cheaper to buy than repair
2. You live in it and it is not an income producing asset. Either put the expenditure off or put a future date on the replacement quote.
3. As for your imaginative ideas, they are dodgy. By seeking payments to secure the apartment, you make it look like a capital arrangement (you are selling an option for furture tenancy, for example).
If these payments are rent in advance, then again it looks dodgy and possibly a capital arrangement, not income. (You are not being paid for a service but a right of some kind
Thanks Harold.
Magnet, I resent your assertions. I’m just asking questions so I know what is legal, so I can steer a clear path and not rip anyone off. I think people like me are trying to gain knowledge by asking questions. I’m afraid I have not studied tax law, but there is nothing wrong with exploring the boundries of legality, so you can stay within them.
If I knew the awnser or didn’t care, I wouldn’t bother asking for advice in the first place would I now ! Doh !
There are plenty of investment and tax practices that can look doggy to some, yet are quite legal.
But as mentioned, I am seeking advice and not judgement or your wayward assertions.
The question has now been adequately answered.
Thanks Michael. I think its quite clear now. You learn something every day.
Thankyou all for your contributions.
The topic ‘Repair Expenses or Capital Expenditure ?’ is closed to new replies.
