Private ruling: Rental property deductions
Date of advice: 24 August 2017
Published: December 2017
Ruling period: 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Q1: Are you entitled to a deduction for the expenses incurred in rectifying a section of a wall that was structurally unstable at your commercial rental property? | A1: Yes The expenses you incurred to structurally secure a section of the wall at your commercial rental property are an allowable deduction, as they satisfy the requirements of section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997).

Relevant facts and circumstances: The Trust owns a commercial rental property. The Trust purchased this property in 19AA. The property consists of land and a commercial building, which is over 32 years old. The property has always been leased or available for lease. The roof of the building was made of asbestos, which was in poor condition. In late 20BB, the Trust was advised by a construction consultant to replace the asbestos roof. The roof was replaced between in early 20DD. During the removal and replacing of the asbestos roof, an engineer provided a report advising that the section of raking brickwork on the southern side of the building is structurally unstable and that the parapet wall is to be structurally secured with metal bracing urgently, as a matter of public safety. Following the requirements of the engineer’s report, the southern brick wall was rectified by installing metal bracing to provide stability. No other structural changes were made to the wall. The metal bracing that was used is deemed to be the modern equivalent, which returned the wall to its original efficiency of function. The wall rectification work did not produce a new or different function of the property.

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