If you have made changes to your rental property, you might need to change your Depreciation Schedule. And if you are late lodging your 2022 tax return, you’ll need to do that quickly. All you need to do is email firstname.lastname@example.org and let us know, what you added, when you added it, and how much it cost.
Luckily, we have a very fast turnaround for that sort of thing. And in most cases, there is no charge. We have a fast turnaround for everything we do, which is no surprise given we have been doing this for over 20 years. That’s why more and more investors and accountants are turning to us.
But let’s have a closer look at repairs vs improvements and how to claim each of them.
The ATO’s definition of a repair might surprise you
Generally speaking, a repair means to ‘restore something to the condition it was in when YOU started to rent out the property’.
The longer you have been renting out a property for, the greater the scope to claim work as repairs. And repairs of course are an immediate 100% deduction, which is why people try to claim work as repairs – and why the ATO is on the lookout for incorrect claims.
Anything you do before you rent out a property CANNOT be claimed as a repair.
If you do work on a property that makes it better than it was when you decided to rent it out, you have improved the property.
That means you need to depreciate that work.
Let’s say you decide to install new benchtops in a kitchen before renting out the property because the existing ones are a bit tatty. You are improving the property and need to claim that work at 2.5% per year.
The same applies to carpets and appliances. Even if they are in poor condition, if you install new items before rental, you need to depreciate those items, though of course, they depreciate more quickly than structural work.
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If you need a new Depreciation schedule for a recently purchased property, please get in touch. You can call us on 1300 660 033 or you can make an enquiry online.
If you book a job through our website, you’ll even get a discount.
If you have an older property and you aren’t sure if there is depreciation in it, give us a call on 1300 660 033. You could be surprised.
It’s always worth a call. Check out our guarantees too, for added peace of mind.