Hey guys,
If you purchase a property that is half renovated and needs to be finished are the costs incurred to make the property rentable classified as a repair or home improvement for tax purposes?
The property needs internal fixings etc and nothing structural. These items are not present in the property so its not a matter that they need to be replaced they need to be purchased and installed.
Thanks
If there is nothing there to repair or maintain then it is not R&M.
You have purchased without these items, cannot lease it in the current state then it must be an improvement.
Thanks Scott,
I thought that was the case. At least we can fix it and build equity into the property.
Cheers
There was a recent blog entry on the API website about this -http://www.apimagazine.com.au/blog/2011/08/understanding-repairs-and-capital-improvements-its-tricky/
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
You will still be able to claim depreciation on the works.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry and Jamie. That clears it up for me. We didn’t delve too deep into the scenarios at university beyond the if your repairing something already there or if your extending or adding to a property.
All our works will be capital improvements and give us a deduction for our tax as depreciation. The other benefit is that we will quickly build equity by carrying out the repairs.
Thanks for your help and the link to that article.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
