Private ruling: Rental deductions - repairs
Date of advice: 12 September 2024
Published: 21 October 2024
Ruling period: Period ended 30 June 2024 | Period ending 30 June 2025
Date scheme commenced: 9 October 2023

Ruling: Q1: Are expenses associated with engineering works on the foundation immediately deductable as a repair as per section 25-10 of the Income Tax assessment Act 1997 (ITAA 1997) in the 2024 year? | A1: Yes. Your expenses meet the requirements of a repair in Taxation Ruling TR 97/23 and are deductible. Further information about repairs can be found by searching QC 23635 at ato.gov.au. The underpinning is not considered to be a renewal or reconstruction of an entirety, it is not an initial repair, or an improvement and the expense is in respect to an income producing asset. Therefore, your expenses associated with ongoing maintenance of the foundations are deductible under section 25-10 of the Income Tax Assessment Act 1997 . | Q2: Can you claim expenses incurred to replace roofing as deductions under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997) during the 2025 year? | A2: Yes. Your expenses meet the requirements in Taxation Ruling TR 97/23 and are deductible. Further information about repairs can be found by searching QC 23635 at ato.gov.au. The roofingreplaced is not considered to be a renewal or reconstruction of an entirety, it is not an initial repair, or an improvement and the expense is in respect to an income producing asset. Therefore, your expenses are deductible under section 25-10 of the Income Tax Assessment Act 1997 .

Relevant facts and circumstances: You own an investment property (The Property). Settlement was dated XX X 20XX. The property has never been used as a main residence. The property has been tenanted and used as a rental property for almost the entire time (approximately X years) with only short breaks between tenancies. This property is maintained by a Real Estate firm, who manages most of the affairs regarding the property. Pre-condition report A pre-condition report was done when you purchased the property. The pre-purchase standard report was conducted XX X 20XX is attached. Primary method of construction • Main building: Brick veneer. Fibre cladding • Main Building - Piers: Brick. Timber • Main building - Floor: Concrete Slab • Main building - Roof construction: Metal Pre-condition report summary The pre-condition report found the following: • No evidence of serious safety hazards was found • No major structural defects were found • Some evidence of secondary defects was found • Evidence of minor defects was found • Due to the level of accessibility for inspection including the presence of obstructions, the overall degree of risk of undetected defects including structural damage and conditions conducive to structural damage was considered: Typical (for a building of that age and construction) • Overall standard of construction: Acceptable • Overall Quality of workmanship and materials: Acceptable • Level maintenance: Reasonably maintained • Incomplete construction- No evidence was found • Deformation of house framework - No • Dampness - No • Termite Structural damage- No • Other Structural defects - No Secondary defects highlighted by the report. • Cracking/movement was detected to the right side of brickwork/masonry walls • The timber posts to front carport should be at least XX mm above finished ground levels to prevent wood decay and possible termite entry • Front Carport downpipe not connected to stormwater drain • Wood decay to sections of fascia timbers Repairs completed since purchase. Over the last few years, you have had to repair a number of foundation issues (underpinning in 20XX) and numerous roof and other repairs. Over the period of ownership, the following reports have been obtained and repairs have been done: • X 20XX - Engineering report + Engineering Underpinning design • X 20XX - Underpinning Executed on Property (3 x Pins RHS of property) increased level by 20mm • X 20XX - Roof Leak repairs • X 20XX - Roof Leak repairs • X 20XX - Engineering report • X 20XX - Engineering quote Engineering report XX X 20XX On XX X 20XX, you requested an engineering assessment, performed by structural engineers. The report found the following: • Stepped cracking in brick wall (numerous locations). • Separation cracks. • The soil was 'reactive' to changes in moisture levels. Causes of the defects • Soil composition and moisture variation over time • The cycling of moisture content, variations in volume of the soil overtime has occurred causing the footing movement and damage The report concluded the foundations would require further repair and mitigation works. The report recommended ongoing inspections to identify developing risks and mitigation work when identified. In X 20XX, you requested an engineering assessment, performed by structural engineers. They concluded the foundations require further repair. In X 20XX, you got an Engineering firm to complete footing repairs for the property at the cost of $XX,XXX.XX. The engineering firm invoice is dated X X 20XX. Your future intent is to repair/replace the old tin roof on the property which has been installed incorrectly (causing leaks), as identified by numerous roofing companies upon inspection. Existing roof Main building - roof construction: Finished with sheet metal roofing. Roof inspection report was as follows: • Lichen was observed on the roof and the hot water panels. ­ Recommend- seeking further advice from a licensed and practicing roof cleaner, for best method of rectification and associated cost • Tree branch debris were also observed on the rear patio roof ­ Recommend - removing. Proposed roof repairs A quote to repair the roof at the property from Roofing business has been supplied dated XX X 20XX. The quote is for $XX,XXX. The work to be undertaken is to replace an aging metal roof with new Colorbond roof on lowset house. Description of repairs: 1. Full safety rail around house with gutters above 2 metres by a rail company 2. Remove and dispose of old metal roof 3. Supply and install new battens fix all battens to the roof frame, using 75mm brass plated bugle screws 4. Fit steel strapping to the rafter ends and to the top plates of the timber wall frames 5. Supply and install Anti con insulation 60mm over house frame 6. Supply and install Colourbond Trimdeck Sheeting(colour of choice) 0.42 BMT high tensile 7. Supply and install all Flashings and Ridge caps 8. Clean and removal of all roof related debris 9. All works up to QBCC standard's, by licensed and registered roofing company 10. Safety rails removed by rail company All reroofing work would be covered by a XX-year warranty.

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