To claim or not to claim


By Mark Hay – Mark Hay Realty Group Principal

Knowing what you are able to claim from the Australian Taxation Office as a landlord can be difficult.

There are a growing number of investors who are unwittingly leaving themselves open to investigation by claiming renovations and refitting of rental properties as maintenance items.

In the wake of all the home renovation shows and wealth creators urging investors to add value to their investment properties, I am constantly seeing clients making claims that will be disallowed by the taxation office.

For instance, repairs must be related to fair wear and tear over a reasonable timeframe. If an investor repaints and extends an existing investment property within, say, six to twelve months of owning their investment property, they cannot claim repairs and maintenance on 100% of the cost in the year of expenditure, rather, the tax office would suggest these are depreciable at the relevant tax rates, which could be as low as 2.5% per annum.

Similarly, replacing and old and broken wardrobe with a built-in wardrobe would once again be deemed a structural or capital improvement and would only be depreciable at 2.5% and not 100%.

Whilst there are billions of dollars of unclaimed depreciation lying idle every year, the taxation office is now looking very closely at ensuring all these claims are legitimate.

To ensure you are claiming your correct entitled expenses, it may be wise to enlist the assistance of your accountant or a similarly qualified person.


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