Hello everyone. PLease can you help me answer a querie. The tenants have just vacated my house and it is in need of a serious kitchen makeover and carport…..Do I do this now or wait until new tenants move in to get the tax/depreciation benefits? Does the timing matter? Doing it now would be ideal but does this have implications for CGT or tax… is it better to do it when tenanted..???I would appreciate anyone who can prvide me some sensible insight into this issue..
Snowflake
Hello Snowflake.
Do it now, before you have new tenants.
Firstly it’s unreasonable to expect the tenant to live with a renovation mess and secondly you will be able to get a better rental after the reno.
As it’s an investment property it doesn’t matter whether there is a tenant in place or not at the time of the repair/reno. as far as tax deduction/depreciation is concerned.
However, it might be a help to talk to your accountant to see what can be done under the heading of “repair” as opposed to “improvement” (which will be depreciated as opposed to deducted in the one year).
Maybe you can read the booklet entitled “Rental Properties Booklet” at the following link . It has a section which talks about the difference between the two.
http://www.bantacs.com.au/booklets.php
Hope this helps
ElkaIf you know how long the property reno will take advertise it as available after the date that the reno will definitely be finished.
Why? -you have the property available for rent and on the rental market , also you will reduce the down time on your rental income as you will immediately have a tentant ready to move in when the reno is finished.
I have done this twice and had tenants that have been happy to wait until a date when the reno is finished. Drawbacks are you may have a delay in the work and have problems with the expected completion date and you may not be able to ask top price of rent as Work isn’t finished to show tentant.
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