You can claim capital works deductions for construction costs for a rental property that satisfies certain conditions.
Capital works deductions are income tax deductions that can be
claimed for the expenses such as:
building construction costs
the cost of altering a building
the cost of capital improvements to the surrounding property.
Note: You can
only claim a deduction for the capital works on residential rental properties
if the properties were built after 17 July 1985.
If you own a rental property, you may be able to claim a
deduction for the construction costs of:
extensions, such as a garage or patio
alterations, such as adding an internal wall, kitchen
renovations or bathroom makeovers
structural improvements – such as a gazebo, carport, sealed
driveway, retaining wall or fence.
expenses such as architect fees, engineering fees, surveying fees, foundation
excavation expenses and costs of building permits also form part of
The rate of
deduction, and the number of years you claim it for, are determined by the type of
construction and the date
Limits to a claim
You can only
claim a deduction for those periods during the year you used your rental
property for income producing purposes, not when you used the property for
What you need to know to work out your claim
As a general
rule, you can claim a capital works deduction for the cost of construction for
40 years from the date the construction was completed. However, to make
sure that you are eligible, you must have all of the following:
details of the type of
construction was completed
cost (not the purchase price)
details of who carried out
the construction work
details of the period during the year that the property was
used for income producing purposes.
expenses you incur form part of the cost base of your property for capital
gains tax purposes. If you claim a capital works deduction, you will need to
take this into account when you work out your capital gain or loss.
If it is not
possible to determine the actual construction costs, you can obtain an estimate
from a quantity surveyor or other independent qualified person. You can claim a
deduction for the cost of the estimate.
Need a property
Contact us @ email@example.com
Sunday, 10 November 2019