Private ruling: Rental deductions - repairs - termite damage
Date of advice: 2 June 2023
Published: 24 July 2023
Ruling period: Year ending 30 June XXXX | Year ending 30 June XXXX | Year ending 30 June XXXX
Date scheme commenced: DD/MM/YYYY

Ruling: Q1: Are the expenses associated with the restoration of termite damage to the pool deck of your rental property a repair and therefore deductable under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. The Commissioner is satisfied that the restoration of the pool deck, impacted by termite damage, are considered to be repairs and therefore are deductable expenses. | Q2: Are the expenses associated with the restoration of termite damage to your rental property a repair and therefore deductable under section 25-10 of the ITAA 1997? | A2: Yes. The Commissioner is satisfied that the replacement of termite damaged timbers within the dwelling, which do not exceed the definition of repair and become capital in nature, are considered to be repairs and therefore are deductable expenses.

Relevant facts and circumstances: You own an investment property. The building was identified as having termite damage. The damage was contained with treatment. The termite damage occurred during your ownership. The damage caused by termite damage is impacting the liveability and the rental market value of the property. The pool deck is structurally unsound due to the termite damage. You have received advice that the dwelling is not fundamentally compromised, and that the damage can be rectified through repairs. Restoration will be conducted by replacing the damaged areas only. The work proposed is to be as near as like for like. The tenant will not have to vacate the property during the repairs. You have replaced the bearers and decking of the pool deck, reusing the joists and fencing. You have replaced damaged internal and external panelling, framing trim, cornices and floorboards. The works completed have been the bare minimum required to rectify the damage. There will be continued works to roof trusses, structural framing, internal and external timber panelling, framing trim, cornices and floorboards, where works conducted are the minimum required to rectify the damage.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 25-10