Claiming expenses
Asbestos contamination may mean a property can no longer be rented out or must be vacated for a time. In that case some deductions may still apply, including for:
- interest on loans against the property (these are deductible for the whole year, if the property is later rented out after remediation)
- expenses such as council rates, water and land tax
- repairs and maintenance – for example, ensuring living areas are sealed from contaminated areas, such as ceiling, internal cavities and subfloor
- decline in value of written-off and replacement assets, such as carpet
- capital works for replacement buildings, fences and similar.
Expenses for capital works are claimed over several years. The decline in value of depreciating assets is also generally claimed over several years.
For more information on expenses you can claim, see TR 2004/4 Income tax: deductions for interest incurred prior to the commencement of, or following the cessation of, relevant income earning activities.
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 1997.
For more information, see TR 2020/2 Income tax: deductions for expenditure on environmental protection activities.
Government buy-back program
If you participate in a buy-back program, the CGT implications will vary depending on your situation.
If the property was solely used as your main residence for the entire period of ownership, there are no CGT implications on the disposal of your property.
If you used the property to produce income, there are CGT implications. These will depend on your circumstances, including whether it was ever your main residence and how long you've owned it.
We can help answer any questions you have about the tax implications of a government buy-back program. For advice from a subject matter expert, complete the form Early engagement for advice.
If you own an asbestos-affected investment property, check the deductions you can claim. CGT may apply if you sell it.