I'm a first time landlord.what can we do in regards to repairs and improvements that we can claim on tax?

Question

[1] do we have to do these repairs and improvements prior to moving the first tanant in, while their renting the house, between tenants, or just within the same financial year that we have the tenants first rent?

[2] what are some of the things that can't be claimed? i'm thinking of repairing the following: [a] paint internal walls [b] polish floors [c] lay linoneum [d] replace damaged boundary fence [e] add new plants to garden [f] create front porch [g] replace old stove [h] have termite inspection [i] spray for cockroaches [j] service airconditioner [k] check roof and rustproof paint it [l] replace internal lights [j] remove old gas heater that does not function

[3] if you have proof of the state of the house when the tenant moves in, and you end up with a poor tanant who does significant damage e.g $15,000 dollars, can that be claimed of tax, or is it just your loss and you have to bear it?

Answer 1

any thing you do to the house to improve the resale value you can deduct.  

Answer 2

Things that are done to improve the property are considered capital improvements, and are depreciated along with the cost of the property.  These also help when you sell the property in offsetting part of the gains you make.

Things that are done to maintain the property are expenses taken on your annual tax return.  Painting

, floor polishing, termiinspectionsons and pest control, a.c. service are maintenance.  New linoleum, fence, front porch, stove, new lights etc. are capital improvements.

Answer 3

no u cant claim

Answer 4

If you ask a lawyer they will say it is a question of fact and degree - there is no straight answer, but here a few rules of thumb:

Things you do to the house prior to the tenant moving in are probably capital in nature and not deductible (although you should be able to add it to the cost base if it adds value to the house).

A repair is deductible but an improvement is not.  A repair brings the thing back to the condition it was in, whereas an improvement, is well an improvement.

Note there is a distinction between a repair and a complete replacement.  For example, if you rip the carpet out and replace it (or old stove), then the carpet (or new stove) will not be deductible outright, although you should be able to depreciate it (which means it will be deductible but over a number of years).

Hope this helps.  For more details, go to the ato website (www.ato.gov.au) or the ato legal site (http://law.ato.gov.au/atolaw/index.htm)

Answer 5

You can claim any and all expenses to the repairs and upkeep of the house.

Answer 6

you have to do repairs for a tax deduction that would put the house in the state it would have been example, repairs to say oven, air con painting walls are fine, gardens and front porch would not be classed as a deduction ,  also say you have a standard working condition kitchen, you cant claim for say taking it out and putting in a $50 thousand one, being a investment home only do nessecary work while it is tenanted as these all depreciate as well, you will find you will spend enough on repairs without adding extra cost, be sure to get landlord protection for loss of rent and damages and have payments on the house a few months in advance, just to cover your own, good luck and also look for a reputable real estate to manage the place, the tax departments rules have re4cently changed and they are a lot more strict on what you can claim

Answer 7

Some of the answers here contain some correct information but you'd be better off reading this tax ruling from the ATO and having an accountant prepare your tax return and explain how the laws apply to your circumstances:

http://law.ato.gov.au/atolaw/print.htm?D...

Search the ruling for the term "initial repairs" (press Ctrl and F at the same time on your keyboard). Repair expenses which involve restoring the condition of the property to how it was before the tenant damaged it, or caused wear and tear, are deductible against income. Other types of "repairs" may actually be capital in nature and may be written off over a number of years instead and offset against the capital gain when you sell the property.

This fact sheet from the ATO will be useful too:

http://www.ato.gov.au/individuals/conten...

The ATO don't change these laws. They just make more of an effort to investigate and enforce them sometimes. They always doing risk management reviews in relation to new rental properties. So invest in some professional advice. Good luck :)