Private ruling: Repairs to rental property water damage.
Date of advice: 27 April 2020
Published: June 2020
Ruling period: Years ending 30/06/2019 and 30/06/2020
Date scheme commenced: 01/07/2018

Ruling: Q1: Are your expenses deductible as repairs? | A1: Yes. Your expenses meet the requirements in Taxation Ruling TR 97/23 Income tax: deduction for repairs and are deductible. Further information about repairs can be found by searching 'QC 55249' on ato.gov.au

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You own 50% of the legal title to a rental property. You purchased it more than ten years ago and it was immediately made available for rent. It has been used as a rental property ever since. The whole building has suffered damage and degradation from water ingress. Your unit has been one of the most severely affected with multiple leaks occurring since June 20XX. At an Extraordinary General Meeting of the body corporate, a special levy was agreed and a contractor was appointed to conduct the roof and façade rectification work. The scope of works tender document listed the following remedial works: 1. Replacement of the existing roof membrane; 2. Reconstruct the East facade cladding to install weatherproof flashings; 3. Repair and waterproof facade movement joints; 4. Waterproof the facade rendered surfaces with application of a coating mixture membrane; 5. Investigate facade windows and doors assemblies for water leaks; and 6. Water test balconies and waterproof. Balcony doors were excluded from the initial tendered works as they were not deemed to be common property. Repairs to two balcony door sills were necessary due to the failure of waterproofing membranes and sub sill flashings. Different materials to the original were used in the installation of flashing and in the waterproofing of the façade. However, these different materials were used in the sole pursuit of restoring the previous efficiency of function of the property without changing its character. You provided a letter from your consultancy firm which stated: The works ... based on our technical specifications were purely repair and maintenance works but our engineering view is that these works are not considered capital improvements as like for like finishes were re-installed. You also provided a quotation for the following works: · Remove/repair water damaged sections of plaster. · Mould treatment. · New plaster board and plastering. · Seal and painting to match existing colour scheme.

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