Private ruling: Rental property expenses - repairs
Date of advice: 24 February 2026
Published: 20 April 2026
Ruling period: DD MM YY
Date scheme commenced: DD MM YY

Ruling: Q1: Can you claim a deduction for the cost of repairing the damaged section of ceiling in your rental property? | A1: Yes. Section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for the cost of repairs to premises used for income-producing purposes. However, subsection 25-10(3) of the ITAA 1997 does not allow a deduction for repairs where the expenditure is capital in nature. Examples of capital expenditure include: • replacement of an entire structure or unit of property (such as a full roof, a complete fence, or a whole ceiling) • improvements, renovations, extensions or alterations • initial repairs (remedying defects or deterioration that existed when the property was acquired) Taxation Ruling TR 97/23 explains that a 'repair' involves restoring the efficiency of function of the property without changing its character. A repair is generally partial, not total, and includes restoring something to its original condition. It may involve replacing only the damaged part of an item using similar materials. Paragraph 50 of TR 97/23 confirms that a repair can still be deductible even if different or newer materials are used, provided the work merely restores the property's function and does not constitute an improvement. In your case, only the damaged section of the ceiling in the X area was repaired. The remainder of the ceiling, including the connecting X ceiling, was not replaced. The work involved reinstating the affected area using similar plaster materials, with no modifications, no enhancements, and no improvement to the property's character or function. The repair work restored the ceiling to its original condition and was undertaken purely because the ceiling section had begun to sag due to wear-and-tear and glue failure. As the ceiling is a subsidiary part of the building rather than a separate depreciable asset in its own right, and the work performed was not an initial repair, the expenditure is not capital in nature. The repair work was carried out while the property was being used to produce rental income, and the cost is attributable to deterioration that arose during your income-producing use. Therefore, you are entitled to claim a deduction for the cost of repairing the damaged section of the ceiling in your rental property.

Relevant facts and circumstances: On DD MM YY, you purchased the property located at XXXX for $XX. You are the sole owner of the property. The property is held in your name only, with a 100% ownership interest. The property was first made available for rent on DD MM YY. The property has been available for rent for the entire income year relevant to your private ruling request. The property is managed by a real estate agent. Your relationship with the tenants is a standard landlord/tenant relationship. The property is leased at market rent, with rental charges determined by the real estate agent. There have been no periods of vacancy. You have not personally used the property at any time in the last three years. The property has never been occupied rent-free; rent has always been charged. A defect was identified when the ceiling in the dining area began dangerously sagging due to normal wear and tear and glue failure. The item repaired was the ceiling, which forms part of the building structure and supports the internal roof structure. The ceiling was originally constructed of plaster materials. Only the damaged section of the ceiling in the X area was replaced. The adjoining ceiling areas (including the connecting X) were not replaced, meaning it was not a full replacement of the ceiling. The ceiling was in good condition when you acquired the property. No modifications or improvements were made. The repair did not alter the ceiling's character or function and did not enhance the property's value. The work was carried out by a qualified tradesperson using plaster materials. No other work was undertaken at the same time. You will not receive any insurance or other payment for the cost of the repair. The total cost of the ceiling repair was $XX, and you paid the full amount. The work was undertaken to restore the ceiling to its original condition and to prevent the damaged section from collapsing.

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