Private ruling: Rental property repairs
Published: August 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Are you entitled to a deduction for the expense incurred to remove a tree from your rental property? | A1: Yes.

Relevant facts and circumstances: You own a rental property. During a recent pest inspection, the inspector determined that the tree contained a large termite nest that was damaging the house. The inspector also advised that the integrity of the tree was compromised and that it posed a risk to the house if it fell. You incurred expenses to have the tree removed.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses or outgoings to the extent to which they are incurred in gaining or producing assessable income, except to the extent that they are outgoings of a capital, private or domestic nature. General garden maintenance is an allowable deduction under section 8-1 of the ITAA 1997 where, for example, you pay a tradesman to mow lawns, maintain garden beds or prune trees. However, landscaping is considered to be an improvement and capital in nature and therefore not an allowable deduction. In your case, you incurred expenses to remove a tree that contained a termite nest. The tree had already caused damage to the rental property and posed further risk. The cost of the removal of the tree is not an improvement. Therefore, you are entitled to a deduction for the expense incurred to have the tree removed from your rental property.