I have just recently bought an IP and was wondering the following: What is classified as capital expenditure?
I believe that is is something that will ultimately increas the value of the property. Is there a dollar value that comes into the equation when deciding whether it is capital expense or just general maintenance.
What I have in mind is repanelling the bathroom (to make it more appealing to tenants) at a cost of about $300-400. Would this be classified as Capital expense or could I claim it on tax?
From the sounds of the work you are considering, this is probably an improvement, which would not be deductible under current legislation.
Your ability to claim this would be to get a tax depreciation schedule completed, which will take into account the work completed and maybe capture it under the Low-Value Pool arrangements.
James
Hi Jobee,
Agreeing with George – certainly a capital cost as deductible repairs are just that ‘repairs’
As an aside – you need to consider more than just the taxation issues when owning and managing property. Your primary consideration is to make money – this is achieved through growth and/or rental income and upgrades of the type you have disussed have the potential to do both.
Its all good then [exhappy]
Derek
[email protected]Read my comments? Think I can help you? PM or email welcome.
Thanks for the responses James and Derek. I was planning on doing it anyway. I was just curious to the tax related side of things when capital the expenditure was so small.
Thx again and heres to making money and retiring young!
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