Depreciation, Repairs - Tax Tips

DEPRECIATION

Depreciation of the cost of construction is available to residential property investments made after July 17, 1985. So, while those built before that date do not qualify for write-off the building they are able to amortize the plant and equipment. While requests for building depreciation must be supported by a qualified surveyor to report the ATO (Australian Tax Office) will accept your reasonable estimate of the value of plant and equipment.

REPAIRS OR IMPROVEMENTS

Repairs and maintenance are deductible, no improvements. For example, if during the time of your property, tiles fall off the wall, to replace them would be a repair, but if the house needed re-pose, at the time of purchase, that would be an improvement and not deductible. No deduction can be claimed for their work.

Be sure to make repairs only when the premises are rented.

The work to replace an entire unit or a connection is an improvement, not a repair. So do not tear down and replace, for example a fence, just replace the damaged area.

Removing tree is deductible if the trees have become diseased, infested or are causing damage, all during the period of ownership. Is not deductible if it can cause harm in the future or if, for example, you are sick of cleaning the leaves.

Deductions for Furniture & Equipment (Division 43)

43 Before a deduction can be successfully split the taxpayer must demonstrate to the satisfaction of the ATO -

* The scope of work,

* The date on which the work was done,

* The cost of labor, and

* If the work qualifies for a deduction of division 43.

If you are unable, or unwilling, to obtain reasonable evidence of these facts, you are not entitled to a deduction of Division 43. If you claim a deduction without the required proof you could have your claim was rejected and shall be liable to penalties. Ideally, the application must be based on official documentation, which may take the form of architectural drawings, specifications, contract documents, receipts or photographic evidence .......