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Tax Robin
Tax Robin, Tax Advisor
Category: General
Satisfied Customers: 13317
Experience:  15 plus years International Tax Law, Instructor
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we have owned an investment property years and are

Customer Question

we have owned an investment property for 10 years and are thinking of moving in and paying it off in full. are we able to claim any of the costs of bringing the property back to its glory? eg. we want to paint it inside and out, renovate the kitchen and bathroom etc as its all old and tired now? our other option is to keep renting it out for 12 months but do the reno's whilst tenants are in it? can we claim the painting, new kitchen, bathroom, replace aircons etc in this scenario and is it worth it if we only rent it out for another year? some advice please. thankyou.

Submitted: 1 year ago.
Category: Australian Tax
Customer: replied 1 year ago.
Relist: No answer yet.
Expert:  Tax Robin replied 1 year ago.

Hello

You generally can't claim income tax deductions for the costs of owning the property because it doesn't generate rental income if you move back in and use as your main home.

You may be able to include your costs of ownership in the property's cost base, which would reduce any capital gains tax liability when and if you sell it.

You asked is it worth it. Well that depends on how much you spend and of course if you can claim all in one year.

You can deduct the decline in value for an income year of a depreciating asset (such as carpet, furniture and appliances in a rental property) that you held for any time during that year. The decline in value of a depreciating asset starts when you first use it, or install it ready for use.

For assets costing $300 or less, you can claim an immediate deduction for the entire cost (to the extent you use it for a taxable purpose).

As you would not be able to claim the potential full amount in one year it may not be worth your waiting.

You can add the improvements to the cost for when you sell. This may assist you based on the Partial Exemption you may receive because you used for rental.