Private ruling: Rental Property deductions
Date of advice: 8 April 2019
Published: May 2019
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Are you entitled to an immediate repairs deduction under section 25-10 of the Income Tax Assessment Act 1997 for the expenditure you incurred for the works to your rental property apart from the replacement of light fittings and the corresponding portion of the builder’s insurance? | A1: Yes. Apart from the replacement of light fittings, the works undertaken are considered to be repairs as per Taxation Ruling TR 97/23 and are immediately deductible. Further information about repairs can be found by searching 'QC 55249' on ato.gov.au

Relevant facts and circumstances: You purchased a residential rental property more than 10 years ago. Your property was purchased in good condition and has been rented continuously since being purchased. Your property has incurred substantial wear and tear while being rented and fallen below its original purchased condition. You decided that rather than make repairs as they arose that you would make all repairs at one time and you hired a building contractor to undertake all of the necessary work. The work to your property was carried out and the property was not vacated during this time. Your itemised invoice from your builder detailed the following: 1. Builder’s public liability and works specific insurance and preparation of site for work. 2. Repair water leak in main bathroom. 3. Repair render to walls throughout the house. 4. Repair rising damp in ground floor lounge. 5. Repair windows and doors in the house. 6. Repair damaged plaster ceilings in the kitchen, ground floor bathroom and back bedroom. 7. Paint all doors and windows in the house, 8. Remove broken and loose tiles in the main bathroom. Clean residual glue so new tile inserts can fit in and blend with existing tiles. 9. Jetblast grease and dirt off the kitchen floor, backyard, front veranda. 10. Repair existing stairs. 11. Replace broken light fittings and fix loose switch plates and GPO points. 12. Replace approximately 40 broken roof tiles. Sourced matching roof tiles to replace. 13. Repair the back timber door and fit new lock and hinges. 14. Removal of all rubbish and clean after works. Your tax agent concedes that the replacement of the light fittings and the corresponding portion of the builder’s insurance are capital in nature.

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