Hello,
The ATO’s 44-page booklet on tax deductions is rather confusing. Does anyone know of a short list of things you can claim if you make improvements to the property such as installing air-conditioning, new carpets, new kitchen, new bathroom, painting, etc. I’ve recently bought a 3 bedroom unit & want to add value by renovating it thus increasing the weekly rent amount as well as the capital value of the unit. Any ideas?
Col
The 44 page booklet doesn't give the commissioners ruling on the effective life span of items
You need to also look at the commissioners ruling on effective life spans of added items.
http://law.ato.gov.au/pdf/tr06-005.pdf
depreciation effective life spans .I think page 92 may be of use to you.Fixtures will be considered part of the building, so they are claimed as building writeoff like cupboards, pantry, wardrobe, ect which I think is at a rate of 2.5% per year
It would be a good idea to check up on ATO web site what rate building writeoff or capital works depreciation are and what the reduced cost base rule is and how it affects your future capital gain.
You might consider employing a quantity surveyor to work this all out for you and provide you with a detailed depreciation schedule you can give to your accountant.Hi Col,
In order to be eligible for an immediate writeoff expenses must be directly related to renting the property and returning it back to its original condition. One on the cheapest ways of course is a coat of paint after you've had the place tenanted for a while.
As Brett has said though if you improve the property with a new kitchen, bathroom etc. these will be treated as capital improvements and only eligible for the 2.5% writeoff.
The following is a list of the most common rental expenses you can claim:- Advertising
- Body Corporate fees
- Cleaning
- Council Rates
- Gardening
- Insurance
- Interest
- Land tax
- Legal fees relating to tenants
- Pest Control
- Property Management fees
- Motor vehicle per km
- Repairs and maintenance
- Stationery, phone and postage
- Travel and accommodation
Decline in value (Your Accountant will calculate this)
Many thanks to AmandaBS & Duckster for their comments. I've just spent 4-5 hours on this website researching & reading advice from others on investing…lots to learn.
All the best!
Col
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