Hi All
Sorry if this has been answered before.
I have Investment Property. Tenants currently left, Property is in poor state and will not be leased for at least 2 months whilst it is repaired and cleaned up to make it suitable to rent.
Can I still claim all the expenses ie: interest on loan and all cleaning costs, ie: bin hire, carpet cleaning etc – even though no rental income for these 2 months.
Thanks
Hi Fig
In short, if you can substantiate that all the work you are doing is repairs and not capital improvements then yes you can claim all the costs you mention in this tax year.
However there are many more qualified people on this forum than me in this area so I'd suggest you listen well to them and speak with your accountant on the subject.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Fig,
If your intentions are to keep the property as an investment once the tenants have left then i believe you can still claim the interest and costs even if there is no rental income.
If your intentions were to fix up the property and then move into it then you would not be able to claim as a deduction.
It all comes down to the purpose and what your intentions are.
If you want peace of mind that you are doing the right thing then you could always give the ATO a quick call to verify.
Shane.
If you are planning to continue renting, and you are repairing the damage (as opposed to improving the property) then you can claim these costs as expenses.
I disagree. You can only claim interest if the property is available for rent. Some people advertise it for rentearlier than it's ready to get around this. You need to decide whether the ATO will know it was not rented because of the reno's or because you were waiting for a tenant. Up to you.
The other things can be claimed because the need has arisen because the property was tenanted (eg repairs). If they are capital improvements though (eg replacing the carpet- as opposed to cleaning it) you cannot claim them.
Definately see your accountant, however I agree with Paul's post.
Issue is likely to be, whether you are repairing (immediate deduction) or improving (capital depreciation deduction).
Catalyst, interest can be claimed if a property is not available for rent so long as certain critea are met.
To this extent, if you were to purchase a vacant block of land, build a rental property, then rent it out you might be entitled to claim interest from the day you purhcased the block.What is a 'repair', ATO TR 97/23
Cheers,
Rob
Does this answer my question. Taken from ATO website.
Expenses prior to property being available
for rent.
You can claim expenditure such as interest on loans,
local council, water and sewage rates, land taxes and
emergency services levy on land on which you have
purchased to build a rental property or incurred during
renovations to a property you intend to rent out. However,
you cannot claim deductions from the time your intention
changes, for example if you decide to use the property for
private purposes.Figc wrote:Does this answer my question. Taken from ATO website. Expenses prior to property being available for rent. You can claim expenditure such as interest on loans, local council, water and sewage rates, land taxes and emergency services levy on land on which you have purchased to build a rental property or incurred during renovations to a property you intend to rent out. However, you cannot claim deductions from the time your intention changes, for example if you decide to use the property for private purposes.The website you reference is discussing ongoing holding costs which are usually on the revenue account.
Your original post refers to a property in a state of disrepair.
Expenses of a restorative nature would be deductible even though the property is vacant to effect these 'repairs'.
Exceptions are where you 'improve' your capital assets, replace them in an entirety or they are an 'initial repair' in that the defects were present when you originally acquired the property.
These issues are discussed in the abovementioned ATO tax ruling. go to http://www.ato.gov.au and access the legal database and type in the ruling number.
Regards,
Rob
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