Private ruling: Rental property deductions
Date of advice: 2 November 2023
Published: 11 December 2023
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Can you claim a deduction for the cost of the work completed on the roof of your rental property? | A1: Yes. In your case, while you used different materials to repair the roof, the work was done to restore the roof to its original function. The roof is a subsidiary part of the building, rather than an asset in its entirety. As the roof was in a good state at the time you purchased the property, the work done was not an initial repair. Therefore, you can claim a deduction for the cost of the work completed on the roof of your rental property.

Relevant facts and circumstances: You purchased a residential property, and it has been rented or available to be rented since its purchase. During the time you have owned the property, there has been previous damage to the roof because of tenant actions. In one of these instances where repairs were required, the repairer used a different tile profile (as the tile profile for the original roof is no longer available). The difference in tile profile meant there was no proper seal and was a contributing factor to storm water damage that occurred and required substantial roof, ceiling, and internal repair in a previous financial year. It was also identified that the sarking under the tiles had deteriorated. The deterioration was to the extent that it no longer provided a water barrier and needed to be replaced to repair it. The repairs performed to the sarking and roof tiles were temporary, but it could not be guaranteed the roof was watertight. As the roof could not be guaranteed as watertight, your insurance provider stated they would no longer provide insurance for the roof or any damage that occurred to the property as a result of the unsound condition of the roof until it was properly repaired. It was determined that to properly repair the existing roof sarking and cladding the following would need to occur: • all the tiles would need to be removed • the sarking would be replaced • the tiles would then be reinstalled. A number of the tiles were already somewhat damaged, and it could not be guaranteed the tiles could be safely removed and reinstalled without further breakages. Additionally, it is no longer possible to obtain compatible roof tiles with the same profile as these are no longer available. As such, new tiles would be required for the entire roof. The following work was performed: • the tiles were removed • a sarked insulation blanket was installed • the tile roof was replaced with Colourbond roofing (as this was the most economic option). You paid for the work done to repair and replace the entire roof of your rental property.

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