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Edited version of private advice
Authorisation Number: 1051615733668
Date of advice: 12 December 2019
Ruling
Subject: Deductions - Rental properties- removal of asbestos & restoration of rental property- repairs
Question 1
Are you entitled to a deduction for the income-producing use of your property in relation to the removal and replacement of asbestos cladding and a clearance certificate following removal of the asbestos cladding?
Answer
Yes. The removal of asbestos and provision of a clearance certificate following removal of asbestos cladding will be deductible under section 40-755 of the ITAA 1997 as an environmental protection activity. Further information about Asbestos-affected properties can be found by searching 'QC 43708' on ato.gov.au
Question 2
Are you entitled to claim a deduction for the income-producing use of your property in relation to the replacement of wooden stumps with concrete stumps under section 25-10 of the ITAA 1997?
Answer
Yes. Your expenses meet the requirements in Taxation Ruling TR 97/23 and are deductible. You are entitled to claim a deduction for the replacement of wooden stumps with concrete stumps. Further information about repairs can be found by searching 'QC 55664' on ato.gov.au
Question 3
Are you entitled to claim a deduction for the income-producing use of your property in relation to the carpentry undertaken to weatherproof the house, install eaves, repair holes in weatherboard and frame three windows to cover gaps?
Answer
Yes. Your expenses meet the requirements in Taxation Ruling TR 97/23 and are deductible. You are entitled to claim a deduction in relation to these expenses. Further information about repairs can be found by searching 'QC 55664' on ato.gov.au
This ruling applies for the following period:
30 June 2019
The scheme commences on:
1 July 2018
Relevant facts and circumstances
You purchased a property at XXXX on XXXX. You rented the property out from that date until XXXX.
During XXXX the condition of the stumps deteriorated significantly. This became noticeable in the unevenness of the floor. The house dropped primarily round the sides.
During XXXX, the back sliding door was unable to be locked securely nor shut fully due to the doorframe no longer being square.
The tenants moved out and you could not get new tenants as the door posed a security risk due to the inability to close or properly secure it.
As a result of the stump deterioration and the house sinking, the shower wall had come away from the bathroom wall. The shower wall had to be reattached with screws, making it unlikely to still be waterproof. Bathroom tiles were also cracking from the house movement.
You obtained quotes to level the house and were advised the existing timber stumps would need to be replaced with concrete stumps.
To access the house for restumping, access was needed around all sides to joist height. To enable this, cladding had to be removed around the bottom of the house. Upon inspection it was discovered the cladding contained asbestos.
Cladding couldn't be removed only at the bottom of the house because it would pose a safety risk if cut into. Therefore all of the cladding and the eaves had to be removed.
Once the cladding was removed, two cut out holes in the weatherboard were discovered along with a small area of weatherboard missing at the back near the sliding door. There were also windows that had gaps between the window frames and the weatherboard.
As a result of these issues, holes in the weatherboard were repaired, the eaves were replaced, three windows were framed and baseboards were attached to ensure the house was again waterproof.
After these repairs, you needed to paint and fix the bathroom.
You stated that the amounts you have spent on repairs are as below:
$XXXX
Carpentry portion of works to weatherproof the house, install eaves, repair holes in weatherboard, frame three windows to cover gaps.
$XXXX
Removal of asbestos containing external cladding and supply clearance certificate from 3rd party inspector on completion of works
$XXXX
Restumping of the whole house
Relevant legislative provisions
Income Tax Assessment Act 1997 section 25-10
Income Tax Assessment Act 1997 section 40-755