Edited version of private advice

Authorisation Number: 1052402897789

Date of advice: 5 June 2025

Ruling

Subject: Deduction - rental property expenses

Question

Are you entitled to an immediate repairs deduction under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997) for your share of the costs incurred in relation to the restumping of your co-owned investment property?

Answer

Yes.

Taxation Ruling TR 97/23 Income tax: deductions for repairs discusses the issues of initial repair, the distinction between a repair and an improvement, and reconstruction of the entirety. Based on the information provided to the Commissioner, the restumping of your rental property is a repair and your share of the cost is an allowable deduction under section 25-10 of the ITAA 1997 in the 20YY income year. We have taken the following into account:

•                     Given the issue arose after almost 2 decades of owning the property we do not consider the work done is an initial repair.

•                     We acknowledge you simply followed the advice you received that concrete stumps are the modern equivalent of timber stumps, and we do not consider the use of concrete stumps to be an improvement to the property.

•                     It is considered the stumps are only part of the house and do not constitute an entirety. The house itself is the entirety and therefore the replacement of the stumps is not the replacement of an entirety.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

On XX XX 20XX, you and your spouse purchased a property located at XX XX XX for $XXX.

You and your spouse are joint tenants with 50% ownership each.

Within a year of purchase, the property was first rented.

The property has been available for rent through the entire income year.

The property is managed by a real estate agent. You have a landlord/tenant relationship.

The rent is charged at market rate, considering current market conditions and the condition of the property.

The property has remained a rental property since first rented in 20XX. Vacancies have occasionally occurred due to change over in tenancies.

You have not personally used the property since it was first rented out.

There have not been any times of occupancy without rent charged since first being rented.

Circumstances leading to the repair

On XX XX 20XX, your tenants notified the property manager that an area of flooring in the living area had started to sink, which had opened cracks in the timber floorboards.

On XX XX 20XX, work commenced to replace all stumps. The work was carried out by a restumping company.

The original stumps were made of timber. The replacement stumps are made of concrete.

You were told that concrete stumps are the modern version of timber stumps.

No modifications to the house were made.

The house was brought to the correct level.

The stumps did not need replacement at the time you purchased the property in 20XX.

The works have been paid by you and your spouse.

No insurance or other payment was received in relation to the work done.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 25-10

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