Private ruling: Deductions - rental repairs
Date of advice: 2 March 2021
Published: April 2021
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a deduction for the cost of replacing the roof of your rental property as a repair? | A1: Yes. Yourexpenses meet the requirements in Taxation Ruling TR 97/23 and are deductible. Further information about repairs can be found by searching 'QC 23635 on ato.gov.au

Relevant facts and circumstances: You own a property (The Property). The Property has been rented out for many years. The Property had been insured for many years with an insurance company prior to the damage occurring. In 20XX, the insurance was renewed, excluding the part of the roof consisting of asbestos. A small percentage of the roof had previously been replaced with non-asbestos sheets. The roof of The Property was extensively damaged during a severe hailstorm in 20XX. Due to this damage, the roof needed to be replaced. The insurance company declined to cover any damage to the roof and cancelled the insurance policy in late 20XX. As the original roof was made from asbestos, the new roof had to be made of a different material. No improvements were made when the roof was replaced, and the new material was applied to the same shaping of the roof. The original fascia board was water damaged and required replacement. The original skylight sheeting was also damaged and required replacement. The guttering on the left- and right-hand side of the roof also required repair. The total cost of the removal and replacement of the roof and associated repairs was $XX, XXX. You did not claim a deduction for replacement of the roof in your income tax return for the relevant income year. If the amount for the roof replacement is deductible, you will request an amendment to your income tax return for the relevant income year.

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