MAINTAINING A HOME
Property investors: get those home repair projects done before EOFY
30 May 2019
Tax time is approaching – fast! It’s a busy time of year for those looking to get their investment property paperwork in order, and make the most of potential deductions and benefits.
If you have an investment property, now’s the perfect time to take stock of how it’s looking and assess what needs to be done. Staying on top of repairs and maintenance jobs year-round is always a good idea, but if you time it well you could reap the benefits in your tax return.
Get your finances in order
Before jumping headfirst into any big maintenance jobs, it’s worthwhile reviewing your current finances. This can be confusing, especially if you have multiple properties and difference expenses associated with each one.
If you have a property manager, they should be able to provide you with a breakdown of all the income and expenses from your investment portfolio. This information can give you a better understanding of your current cashflow, and see how much you may have for maintenance jobs.
Know what you can claim
With your budget in order, you can start looking at that long list of jobs and pick what needs doing first. If you’re planning on claiming or deducting your investment property upkeep this year, there’s a few things you need to be across.
In general, the Australian Taxation Office (ATO) allows you to either claim or deduct the costs of three categories of upkeep on your property: repairs, improvements and maintenance.
Repairs are considered any work carried out on your property to restore something to its original state or function. If some damage has happened to your property (for example a car destroying your fence), then any fix you make to it using similar material would be considered a repair.
Looking to upgrade that broken fence? That’s usually considered an improvement, something that isn’t covered by the ATO up front. Improvements can still have tax benefits, especially if you intend to claim deductions for depreciation or capital works.
Maintenance is any work carried out to prevent deterioration, or to fix existing deterioration. The ATO treats maintenance related to wear and tear as an immediate tax deduction (i.e. against your current year’s income) for property investors. Be aware, any larger renovations are still treated as capital improvements and need to be written off over a few years.
Maintenance jobs that can be ticked off before EOFY
Knowing you can claim maintenance jobs that prevent or fix deterioration is one thing, but where do you start identifying what those jobs are? There are some common culprits to look out for, including:
- Damaged guttering
- Broken light fittings, tiles or windows
- Service on electrical appliances or machinery
- Worn tap washers and fittings
- Gas and hot water heater checks
- Gardening and lawn mowing
- Pest control
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The information is intended to be of general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon the information. Please make your own enquiries.