Repairs or Renovation - Improvement or repair?

What if you’re contemplating that art deco meets Moroccan bathroom reno?

No doubt, remodeling a space is a sure-fire way to attract a rental crowd and increase its value to potential tenants – and it can be especially rewarding if you one day decide to put the home on the market for sale.

But since such work is recognisable by the ATO as an ‘improvement’, renovations of this nature and scale won’t be immediately claimable in your yearly tax lodgement.

According to the ATO, an improvement is classified as work that "provides something new, generally furthers the income-producing ability or expected life of the property, generally changes the character of the item you have improved, and goes beyond just restoring the efficient functioning of the property”.

Therefore, there is a boundary between what can be immediately claimed and what can’t be, in terms of the work you do to an investment or rental property.

On some occasions, it’s a thinner line, especially when a rental owner approaches a job with the best intention to carry out maintenance work or execute a simple repair, but the job at hand unintentionally wanders beyond that.

So, how can you predict whether you’re about to cross that line?

RealRenta has all the tools that a property manager has, but at over ¼ the cost of a property manager.

Join now and the cost is less than a cup of coffee a week to manage your rental property

RealRenta also has a free vision, so why not check it out

Jason Gwerder
Friday, 25 June 2021

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