Private ruling: rental property expenses
Date of advice: 19 July 2017
Published: November 2017
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you entitled to claim an immediate deduction for your share of the cost of replacing the guttering, fascia wrap, downpipes and eaves sheeting of your 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 premises used for income-producing purposes that are not capital. The word 'repair' is not defined within the taxation legislation. Accordingly, it takes its ordinary meaning. Taxation Ruling TR 97/23 states that the word 'repair' ordinarily means the remedying or making good of defects in, damage to, or deterioration of, property to be repaired (being defects, damage or deterioration in a mechanical and physical sense) and contemplates the continued existence of the property. In your case you have replaced components which were deteriorated to a state where they needed replacement with like materials, existing infrastructure was retained where possible, and the material containing asbestos was dealt with in the most effective way. The work is not regarded as being capital. Therefore you are entitled to a deduction for the costs of the repairs.

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 are the co-owner of a property which was built over 50 years ago, purchased by you over 15 years ago, and rented since then. Until recently the property had needed only minor maintenance and necessary repairs, since then you have had to attend to more major maintenance work. You have had to undertake a structural repair of the roof, including re-bedding and re-pointing, due to water damage to the interior of the house. The guttering, fascia and downpipes were paint worn and in a state of deterioration due to age, warping and rust, you replaced the guttering and downpipes, and clad the fascia in a colour bond equivalent. The existing eaves sheets were made of asbestos and affected by creeper marks so were also replaced. The age and state of disrepair of the existing infrastructure made the work essential. The work carried out did not alter the basic character or functional efficiency of the infrastructure. Where possible existing infrastructure was retained, and only those sections of wood fascia that were warped or rotting were replaced. The removal of the eaves containing asbestos was necessary as it could not have been properly prepared for repainting.

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