Last week, I had a discussion with one of our RealRenta Landlords about whether or not she is entitled to certain tax deductions, if she finds out her investment property contains asbestos.
This is such
a great question, so we searched the ATO’s website and the following is
straight from the source:
· If you are the owner of a residential or commercial investment
property that is affected by asbestos, then certain tax deductions may be
available. If you sell the property, the tax implications will vary depending
on your circumstances.
o
Capital gains
tax (CGT)
o
Claiming
expenses
o
Environmental
protection costs
o
Capital gains tax (CGT)
The ATO works
with state and territory governments to ensure property owners are aware of the
potential tax implications of participating in a buyback program.
If you
participate in a buyback program, the tax implications will vary depending on
your situation:
o Owner-occupiers.
If the property has been used solely as your
main residence for the entire period of ownership, there are no tax
implications for the disposal of your property.
o
Investment property owners.
There are tax implications if you
participate in a buyback program. These will depend on your circumstances,
including whether the property was
ever used as your main residence and how
long you have owned it.
Asbestos
contamination in a property may mean that the property can no longer be rented
out, or tenants need to vacate for a period.
Interest on
loans against the rental property, and other expenses, such as council rates,
water and land tax, may continue to be deductible, if asbestos contamination
means that no rental income is collected.
If there is a
period when the investor cannot let out the property, but it can be let out
after remediation, interest is
Taxation Ruling
TR 2004/4
Other expenses
that you can generally claim
on a rental property may continue to be deductible, depending on the nature or
extent of the situation. These include:
- repairs and maintenance
– for example, ensuring living areas are sealed from contaminated areas,
such as ceiling, internal cavities and sub-floor
- depreciation for
written-off and replacement assets, such as carpet
- capital works for
replacement buildings, fences and similar.
Environmental
protection costs
If your
asbestos-related remediation expenses are not covered by the above deductions,
costs to remove asbestos from a rental property can be classified as an
environmental protection activity under section 40-755 of the
Income Tax Assessment Act 1997External Link.
Source: https://www.ato.gov.au/General/Property/In-detail/Rental-properties/Asbestos-affected-rental-properties---income-tax-deductions/
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Contact propertyloans@realrenta.com
Marlene Liontis
Monday, 11 November 2019
