Property Investor Newsletter March – April 2012

REPAIRS, MAINTENANCE AND IMPROVEMENTS

Many land­lords often ask, “What is the dif­fer­ence between repairs, main­ten­ance and improve­ments in rela­tion to invest­ment prop­erty tax deduc­tions?” So we have taken the time to research this information.

What are repairs and maintenance?

Picture of EASTER

Going on Holiday?

When the ATO refer to ‘repairs’, they mean work to make good or rem­edy defects in, dam­age to or

deteri­or­a­tion of the property.

For example:

  • repla­cing part of the gut­ter­ing or win­dows dam­aged in a storm
  • repla­cing part of a fence dam­aged by a fall­ing tree branch
  • repair­ing elec­trical appli­ances or machinery

When the ATO refers to ‘main­ten­ance’, they mean work to pre­vent deteri­or­a­tion or fix exist­ing deteri­or­a­tion. For example:

  • paint­ing a rental property
  • oil­ing, brush­ing or clean­ing some­thing that is oth­er­wise in good work­ing condition
  • main­tain­ing plumbin

 

 

Can you claim repairs & maintenance?

You can claim a deduc­tion for the costs you pay to repair & main­tain your rental prop­erty, in the year you pay them.

What are you unable to claim?

You can­not claim the total costs of repairs and main­ten­ance in the year you paid them if they did not relate dir­ectly to wear and tear or other dam­age that occurred due to rent­ing out your prop­erty. These are cap­ital expenses you may be able to claim over a num­ber of years as cap­ital works deduc­tions or deduc­tions for a decline in value.

What are improvements?

When the ATO refers to ‘improve­ment’ they mean 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

goes bey­ond just restor­ing the effi­cient func­tion­ing of the prop­er­tyThis news­let­ter has been designed to keep you updated on what is hap­pen­ing within the industry and our real estate office

Can you claim the cost of improvements?

You can­not claim a deduc­tion for the total cost of improve­ments to your rental prop­erty in the year you incur them.

Example:

Tim replaced a fibro cement sheet­ing wall inside his prop­erty with a brick fea­ture
wall because it was dam­aged by tenants.

The new
wall is an improve­ment because Tim did more than just restore the effi­cient
func­tion of the wall. This means Tim can­not claim the cost of the new wall as a
repair.

How­ever,
had Tim replaced the fibro with a cur­rent equi­val­ent, such as plas­ter­board, he
could have claimed his costs as a repair. This is because it would have merely
restored the effi­cient func­tion of the wall without chan­ging its char­ac­ter,
even though a dif­fer­ent mater­ial was used.

INVESTMENT TIP:

A COMMON MISTAKE PUTTING IT OFF!

You keep think­ing you have ‘no time’ or you are ‘wait­ing for the mar­ket to bot­tom out’.

Life can be very busy and hec­tic, but isn’t tak­ing con­trol of your
fin­an­cial future a priority?

Prop­erty prices will start to increase and
build­ing is not get­ting any cheaper. How much is pro­cras­tin­a­tion really cost­ing
you?

LOST AND FOUND

ARE YOU FEELING THE FINANCIAL PINCH?

You may be won­der­ing where you could make, or find, some extra cash. We have con­duc­ted some research on your behalf and have sourced five lost and found pos­sible money options.

1. The ATO’s
Super­Seeker web­site. Visit www.ato.gov.au
and type ‘super­seeker’ into the search box. There are more than six mil­lion
super­an­nu­ation unclaimed accounts. All you need is your tax file num­ber and
per­sonal details.

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You keep think­ing you have ‘no time’ or you are ‘wait­ing for the mar­ket to bot­tom
out’. Life can be very busy and hec­tic, but isn’t tak­ing con­trol of your
fin­an­cial future a pri­or­ity? Prop­erty prices will start to increase and
build­ing is not get­ting any cheaper. How much is pro­cras­tin­a­tion really cost­ing
you?

2. Have you for­got­ten about a bank account? There are a large num­ber of bank accounts
that have not been accessed. Visit www.moneysmart.gov.au
and go to unclaimed money.

3. Is there a long-lost fam­ily mem­ber that you did not know about who has left you an
inher­it­ance? All you need to do is con­tact your State’s Pub­lic Trustee office.

4. There may even be shares you
have for­got­ten or didn’t know your aunt or grand­father had bought in your
name. Visit any of these web­sites to
check. www.computershare.com.au,
or www.boardroomlimited.com.au.

5. And don’t for­get dividends. You can check with the com­pany itself, or the
respons­ible State gov­ern­ment depart­ment – the Office of State Rev­enue in NSW
& VIC, the Pub­lic Trustee in Tas­mania,
ACT and QLD, the Depart­ment of Treas­ury and Fin­ance in WA and the Ter­rit­ory
Rev­enue Offie in the NT.

About 

Jhai is an award win­ning Inter­net Mar­ket­ing Real Estate Agent for Eld­ers Toongab­bie and Kings Langley. After run­ning his own inter­net mar­ket­ing busi­ness he has now set his own sites for the real estate industry. He observed that 90% of real estate agents did not know how to mar­ket them­selves online. Jhai is now fixed on one goal. To teach real estate agents that they can mar­ket online so much bet­ter than they cur­rently are.

Since then he has been con­sist­ently quoted in the Sydney Morn­ing Her­ald and Real Estate Busi­ness online. He is a reg­u­lar guest blog­ger on TheHomePage.com.au, shar­ing his expert­ise of mar­ket­ing aspects for the Real Estate Industry. His biggest pas­sions are his wife, mar­tial arts, dogs and most of all property.

seven hills real estate agent NSW
Cnr Federal Road Prospect Highway Seven Hills NSW 2147 Australia