Private ruling: Rental - deductions
Date of advice: 20 August 2025
Published: 20 October 2025
Ruling period: Year ended XX 20XX | Year ending XX 20XX
Date scheme commenced: XX 20XX

Ruling: Q1: Are you entitled to claim the expense you incurred for work carried out on your rental property roof as repair deductions under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. Section 25-10 of the ITAA 1997 provides that expenditure incurred for repairs to any premises, or part of premises, held or used by you solely for the purpose of producing assessable income is an allowable deduction. Taxation ruling TR 97/23 Income tax: deductions for repairs (TR 97/23) explains the principles and circumstances in which expenditure will qualify as a deductible repair. TR 97/23 explains that 'repair' has its ordinary meaning. It ordinarily means the remedying or making good of defects in, damage to, or deterioration of the property to be repair and contemplates the continued existence of the property. Repairs are ordinarily undertaken with like for like materials or modern equivalents. Where a different or more valuable material is used it changes the state of the thing which is subject to damage and will not generally be a repair. If the work amounts to a substantial improvement (an upgrade), addition or alteration, it is not a repair and is not deductible under section 25-10 of the ITAA 1997. The roof repairs undertaken amount to remedying or making good of defects on the roof on a property that has been rented out for many years. The deterioration of the roof has been exacerbated by recent heavy rain. The material used on the roof is consistent with more modern equivalents. All of the cost of works relating to these invoice items are repairs and as such are deductible under section 25-10 of the ITAA 1997.

Relevant facts and circumstances: You own an investment property (the property). The property has been built since 19XX. Before acquiring the property, you conducted a pre-purchase inspection report for the property. The inspection report stated that this property is above average and, within the next five to ten years, a roofing contractor should be engaged to replace any surface rusted roof sheets or roof plumbing. You rented out the property and privately manage it for market rate. The property has not been used for personal purpose. In XX 20XX, the tenant identified multiple roof leaks affecting in lounge room, damp and mould formation and the laundry internal roof is deteriorating and falling in heavy rains. You had tried to patch with the temporary silver patches over multiple holes. Over the ownership period, the roof had been deteriorating by the humid and wet environment. This was exacerbated by the recent heavy rainfall. You engaged a builder to undertake the necessary roof repairs. The repair works include: • Scaffold Installation • Tiger Tail Installation (power line protectors) • Veranda Roof Replacement - Front of home • Dormer Roof and Wall Replacement • Metal Roof Replacement - Main roof up and over - All rear metal roofs • Parapet Restoration • Gutter/Downpipe Replacement - All gutters • Air-conditioning Disconnect/Reconnect You used different materials to replace the old roof sheet. You made several separate payments to the builder in relation to the repair work. During the repair period, the property has not been vacant. You did not claim insurance for the expenses.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 25-10