Private ruling: Income Tax – Deductions – Rental Property
Date of advice: 21 August 2017
Published: December 2017
Ruling period: Year ended 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you entitled to a deduction for the repair costs incurred in relation to the roof of your commercial rental property? | A1: Yes. Section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for the cost of repairs to the premises used for income-producing purposes. In your case, the work was not an initial repair and the damage was not in existence when you first acquired the property. The replacement of the roof constitutes a repair as the change in material did not improve the efficiency or function therefore you are entitled to claim a deduction. For further information, the Commissioners view can be found in Taxation Ruling TR 97/23 Income Tax: Deductions for repairs.

Relevant facts and circumstances: You and a number of other individuals purchased an investment property after 20 September 1985. The roof and guttering of the property were repaired due to rusting which resulted in leakage. Similar materials were used to repair the roof and guttering, and no substantial improvement was made to the asset as a result of the repair. The property is leased at commercial rates.

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