Private ruling: Rental deductions - repairs
Date of advice: 9 October 2023
Published: 20 November 2023
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to an immediate repair's deduction under section 25-10 of the Income Tax Assessment Act 1997 for the expenditure you incurred for the works to your rental property? | A1: Yes. The works undertaken are repairs as per Taxation Ruling TR 97/23 and are immediately deductible. Further information about repairs can be found by searching 'QC 23635' on ato.gov.au

Relevant facts and circumstances: You purchased a rental property a couple of years ago and the property was first offered for rent shortly after it was purchased. The property has never been used for private use. You are managing the rental property yourself. The property was rented out at market rates. Following this the property was damaged by flooding, and in mid-20XX the roof collapsed, and the tenant moved out. These were deemed as the initial repairs which commenced on this date. Due to the flooding damage, the following repair works were required to be completed (which brought the affected parts of the property back to its original state): • underpinning of slab due to shifting/damage to base structure (completed in late 20XX); • replacement of bathroom shower due to cracks and leaks; • roof partially repaired and restoration taken place (completed in early 20XX); • internal plasterboard and ceilings; • new carpet, tiling, and painting; • replacement of faulty electrical items. There have been no tenants since the flood damages occurred until early 20XX where the property now continues to be rented out. You have supplied quotations and invoices which outline the following regarding the repairs undertaken to the property because of the flood damage: 1. Replacement of various faulty electrical items. 2. Removal and replacement of shower screen, removal and replacement of existing floor and wall tiles, and various associated repairs such as grouting of replaced tiles and waterproofing. 3. Supply and installation of carpet and underlay to the lounge, dining and four bedrooms in the main house, along with the supply and installation of carpet and underlay to the lounge, family room, hallway and two bedrooms and vinyl to the kitchen and dining area to the granny flat adjacent to the rental property (which also forms part of the rental property). The invoice also includes all pull-up and removal of existing floorcoverings. 4. Supply of material and labour to maintain ceilings and cornice. 7. Supply of labour and materials to undercoat new ceiling plaster and repaint the ceilings to Bedrooms in the main house, hallway to the house and granny flat, kitchen and dining area in the main house, bedroom in the granny flat, and touch ups in remaining bedrooms and living areas to affected areas. 10. Underpinning works. No insurance proceeds were received for the flood damage as the insurance claim was denied.

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