Private ruling: Rental property deductions
Date of advice: 10 December 2024
Published: 20 January 2025
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are all expenses associated with the rectification of termite damage for the Property considered repairs for the purpose of section 25-10 of the Income Tax Assessment Act 1997 ('ITAA 1997')? | A1: Yes. Significant damage was caused to your rental property due to a termite infestation leaving the property in an unhabitual state. All works outlined in this ruling are not considered to be a renewal or reconstruction of an entirety constituting capital works, they are not initial repairs, or an improvement. Your expenses meet the definition of a repair and you are entitled to claim a deduction for the costs repairing the property under section 25-10 of the ITAA 1997. Further information about repairs can be found by searching QC 23635 at ato.gov.au. This private ruling applies for the following period: Year ending 30 June 20XX. Year ending 30 June 20XX. The scheme commenced on: 1 July 20XX

Relevant facts and circumstances: This private ruling is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this private ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You purchased the Property in DD MM YY as joint tenants. You rented the property out in DD MM YY, to an unrelated party, through a real estate agent. The Property has always been a rental property and has never been used by you to reside in. At the time of purchase, a building and pest inspection was conducted and no evidence of termite activity or damage were found. In DD MM YY, another termite inspection was conducted and found no evidence of termite activity or damage. In DD MM YY, a termite inspection was conducted to the Property and damage was identified because of active subterranean termites. In DD MM YY, you were notified of the termite inspection conducted in DD MM YY, the damage to the property from the termites and the body corporate associated with the Property failed to conduct a termite inspection in 20XX. Based on the report you were notified the following: • The report indicated the overall degree of risk of termite infestation was extremely high. • Subsequently, termite baiting occurred between October DD MM YY and DD MM YY. In MM YY, a termiticide tarrier was installed at the Property. In MM YY, the tenant vacated the property due to unsafe living conditions. The Property was not available for rent after the date the tenant vacated due to the Property being in an unhabitual state due to the termite damage and roof collapsing. In MM YY, an engineer was engaged to inspect the Property. Additionally, a builder was engaged who provided a quote for the repairs in MM YY. The following works took place between MM YY and MM YY: General items: • Removal of all termite nests/ dirt to all affected areas, prior to commencement. • Allowance for skip bins during construction period. • Electrician to terminate and make safe affected areas. • Protect floors as required to complete works. • Builders clean on completion. Upstairs bedrooms: • Replacement damaged areas with new material. • Painted affected areas. Main bedroom: • Replacement damaged areas with new material. • Painted affected areas. 2nd bedroom: • Replacement damaged areas with new material. • Painted affected areas. Bathroom: • Replacement damaged areas with new material. • Painted affected areas. Living room: • Replacement damaged areas with new material. • Painted affected areas. Laundry: • Replacement damaged areas with new material. • Painted affected areas. You have not claimed any of these works on insurance.

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