Can I claim tax on renos to IP with no tenants?

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Pagey
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@pagey_1
Join Date: 2012
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June 16, 2013 - 4:02 am
Hi All,
As above i have an IP i have spent approx .$40k on in past 2 months doing a full reno.
I have been told i cant claim this on tax because the house isn't tenanted. Is this true?
If so how does that work, because if i were to sell the house tomorrow for twice what i paid i would have to pay CG tax on the profit? Shouldn't i be able to claim tax on the renovations that make me the profit/income?
i.e. if I'm going to be taxed on the profit i should be able to claim what i put in to obtain that profit?
I'm sure I'm missing something here??
Cheers
Pahey
Pagey
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Mick C
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@shape
Join Date: 2010
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June 16, 2013 - 4:47 am
Was it ever rented out/tenanted? if so then you will be able to claim the expense ( as long it haven't been untenanted for a long period of time).
However if it's never been tenanted since you bought the place then it's NEVER been "profit/income producing".
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rhino101
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June 16, 2013 - 11:52 am
As Shape said – also – if you have never rented it since owning it, you won't be able to claim the costs as tax deductions but you may be able to add a fair chunk of them to your Capital Cost Base, which will help reduce your CGT liability. Even if you did rent it – you still may not be able to claim all your reno costs as straight deductions. You can only claim deductions for "repairs", NOT "improvements". "Improvements" may be able to be added to your depreciations schedule and reduce your tax in that way.
In any case – get specific advice from your accountant.
Terryw
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@terryw
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June 16, 2013 - 11:56 am
Usually you cannot claim reno costs as outright deductions – mostly capital improvements I would imagine.
Seek specific tax advice.
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Pagey
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@pagey_1
Join Date: 2012
Post Count: 34
June 16, 2013 - 8:46 pm
Bummer, but thanks very much for the replys guys. Ill get onto my accountant
cheers
Pagey
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Jamie Moore
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June 16, 2013 - 11:19 pm
Terryw wrote:
Usually you cannot claim reno costs as outright deductions – mostly capital improvements I would imagine.
Seek specific tax advice.
That's what I would have thought as well – this seems like improvements rather than repairs…..and I don't know if you can get away with claiming repairs soon after purchase because it's assumed you purchased the property at a price that reflects the need for repairs to occur.
Ask an accountant though.
Cheers
Jamie
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