All Topics / Legal & Accounting / Claiming Reno Costs ?

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  • Profile photo of Bradles CBradles C
    Participant
    @bradles-c
    Join Date: 2004
    Post Count: 52
    May 3, 2005 - 1:01 am

    Hi Guys,

    I have recently purchased an investment property in Albert Park (Melbourne). The property was purchased in my investing partners name and he received the first home owners grant. We are going halves in all costs associated with the property. He is going to live in the property for the first 6 months and we are going to do a full renovation (including kitchen and bathroom). After the 6 months we plan to rent the property out for long term (7 to 10 years).

    Can we claim the costs to do the renovations for the kitchen and bathroom ? Is this regarded as Capital Improvement and therefore added to the original purchase price when we calculate Capital Gains Tax in the future ?

    Also, can we start claiming tax deductions on interest of the loan, maintenance, travel, etc as soon as the 6 months is over (after we start renting the property ?)

    Any advice would be greatly appreciated,

    Thanks heaps [biggrin]

    Brad

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    May 3, 2005 - 2:51 am

    I am not an accountant, but think that would be a capital improvement. You should be able to claim depreciation though.

    You should be able to start claiming costs as soo as you are renting or attempting to rent the property.

    Terryw
    Discover Home Loans
    Mortgage Broker
    North Sydney
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    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of depreciatordepreciator
    Member
    @depreciator
    Join Date: 2003
    Post Count: 541
    May 5, 2005 - 4:57 am

    Definitely time to talk to your accountant.
    Strictly speaking, if you purchase a property, renovate it, and then rent it out, the cost of the renovation becomes a ‘cost of acquisition’ when calculating your capital gain i.e. it’s not depreciable.
    The fact that you are going to be doing this work over a period of 6 months and a part owner will be living there at the same time complicates it.
    The ATO don’t really draw a line in the sand when it comes to time. ‘Intention’ may be relevant, though.
    You may not find any ATO Decisions or Rulings that cover your situation. You could request a Private Ruling – better to be safe…

    Scott
    It might be worth getting a privat

    Tax Depreciation Schedules
    Australia wide service
    1300 660033
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    http://www.depreciator.com.au

Viewing 3 posts - 1 through 3 (of 3 total)

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