I’ve lived in my house for 5 years and I’m thinking of renting it out (and moving into rented accommodation).
There are certain things that need doing to the house that I’m wondering if I should do them before or after renting it out:
* paint exterior (its pretty good but the windows could do with a repaint)
* new carpet on stars and main upstairs room (there’s currently a hole on the top step where its worn through).If I do these things after renting it out can I claim them against tax or something? I guess I’ve got to weight up any tax advantage (if someone says there is one against a lower rentable value)
Please forgive these basic questions as I’m new to this.
Thanks in advance,
I think you're right, you can do the improvement up front but then not claim a deduction, and should get more rent, OR do them in six months or so (don't quote me on the timeframe!), claim them, but maybe have more trouble getting a tenant and have a lower rent.
Is the carpet a trip hazard, if so definitely fix it before renting it out so you are not liable for any injury.
Good point about the hazard
thanks
If you replace the carpet and repaint, it is an improvement. As long as your property is on the rental market at the time of the improvement you will be able to claim depreciation expenses each year while rented for the deemed life span of the carpet and the deemed life of the paint job. This is because you are bringing the house up to a rentable standard.
This is not really claiming against tax but claiming as an expense the decline in value of the items while the house is rented.
Where there is some confusion is that an improvement is different to a repair.
A grey area exists on what is a repair and what is an improvement.
If you repair something before the house has been rented it is not a repair but an improvement
If you replace an item in its entire form it is an improvement
If you fix a house beyond the state it was in when you bought it it is an improvement.
If it is an improvement you can claim depreciation on the item in some cases. A quantity surveyor would work out what can be depreciated and work out a schedule for your accountant or for your tax return. An accountant would also know the lifespan of each item claimed as depreciation.
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