Private ruling: Rental properties - capital works
Date of advice: 13 May 2024
Published: 24 June 2024
Ruling period: Year ended XX XXXX 20YY
Date scheme commenced: XX XXXX 20YY

Ruling: Q1: Are the costs incurred to replace the kitchen and shower taps within your property a depreciable expense underDivision 43 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: The kitchen and bathroom taps are affixed permanently to the building and cannot be easily removed without causing damage. As such, they are considered to form part of the fabric of the building. The expenditure on replacing them results in a renewal or reconstruction of an entirety. The expenditure is capital in nature. An annual deduction of 2.5% of the cost of this item is allowable under Division 43 of the ITAA 1997.

Relevant facts and circumstances: You purchased a property. You have the sole ownership interest in the property. The property was made available for rent in 20YY. In 20YY, you replaced the kitchen and shower taps in the property. You have claimed depreciation for the replacement of the kitchen and shower taps since 20YY. On XXXX 20YY, you were advised that the kitchen vanity taps and other taps within the property were leaking. You requested the property manager to organise a plumber to attend to the property on the same day. The plumber attended the property and replaced the kitchen and shower taps as they could not be shut off. On XX XXXX 20YY, you received the invoice detailing the costs of the replacement of kitchen and shower taps totalling $XX. You have paid the plumber's invoice for the kitchen and shower taps.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 43