Private ruling: Rental property deductions
Date of advice: 29 August 2025
Published: 17 August 2026
Ruling period: Year ended 30 June 20YY
Date scheme commenced: DD MM 20YY

Ruling: Q1: Are you entitled to claim a deduction for shower repairs to your rental property under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Section 25-10 of the ITAA 1997 states you can deduct expenditure you incur for repairs to premises (or part of premises) or a depreciating asset that you held or used solely for the purpose of producing assessable income. Taxation Ruling 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 'repairs' has its ordinary meaning. It ordinarily means the remedying or making good of defects in, damage to, or deterioration of, property to be repaired (being defects, damage or deterioration in a mechanical and physical sense) and contemplates the continued existence of the property. It involves restoration of the efficiency of function of the property being repaired without changing its character and may include restoration to its former appearance, form, state or condition. 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 shower repairs were completed to remediate the damage and deterioration to the shower. The repairs did not improve or change the character of the shower. As the property is solely used for the purpose of producing assessable income, you can claim a deduction for the bathroom repairs under section 25-10 of the ITAA 1997.

Relevant facts and circumstances: On DD MM 20YY, you purchased vacant land. Construction of a residential dwelling commenced shortly after the purchase of the land. On DD MM 20YY, the property became genuinely available to rent and has been continually used for income producing purposes. On DD MM 20YY, a routine inspection of the property was conducted and it was noted by the then property manager that work had been completed by a handyman to fix grout issues due to leaks in both showers. On DD MM 20YY, you received communication from your property manager that the water leak issues had resurfaced. The shower repair to resolve the leak issue was not covered by your standard building insurance. In MM 20YY, you received an email from the tenant requesting urgent repairs. You decided to engage the relevant trades immediately to undertake the repairs required to fix the leak issues, as well as make the property safe for the tenants to prevent mould exposure. In MM 20YY, works were carried out to fix the showers. The works carried out were isolated to each shower and no other works were carried out in either bathroom. The works carried out were to the minimum standard required to identify the leaks, inspect all waterlines, replace the shower breech inside the walls and repair any leaks and waterproofing. All materials used were a like-for-like replacement of what was originally installed. On DD MM 20YY, your real estate agent was invoiced by Company A.

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