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Edited version of private advice
Authorisation Number: 1051951647096
Date of advice: 17 February 2022
Ruling
Subject: Rental deductions
Question
Is the expense incurred in respect of the partial restumping and replacement of timber floorboards of a rental property considered a repair and deductible under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes. The expense incurred in respect of the partial restumping and replacement of timber floorboards of a rental property is considered a repair and deductible under section 25-10 of the ITAA 1997. The expense will need to be apportioned for the period in which the property was not used in gaining or producing assessable.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 April 20XX
Relevant facts and circumstances
In April 20XX, you acquired a property (Property).
Prior to the acquisition of the Property, in January 20XX, you obtained a building inspection report (Report).
The Report was prepared based on a visual assessment of the inspected the property.
The Report indicated that the floors throughout the Property were 'Condition visually fine', which is defined in the Report as 'when the inspector has viewed the subject area and sees no major structural defect, no minor defect and there is no repair recommended.'
You occupied the Property as your principal place of residence for 1 year from the date of acquisition.
The Property was rented out between February 20XX and December 20XX under a residential tenancy agreement.
The tenants vacated the property prematurely in November 20XX, upon which various damages were identified and repairs were required, including partial re-stumping and timber replacement of approximately 50% of the property.
A building inspection was not carried out at the end of the tenancy.
A professional restumping company was engaged to assess the damage and a quote was provided for the repair.
You accepted the quote and the work proceeded in December 20XX.
You received an invoice for the supply and installation of new flooring, new bearer, new joists, wall plate full blocking.
The invoice stated that "All Sub Floor Timber Replaced, Existing was rotted".
You had originally intended to re-let the Property after completion of the repairs, however your circumstances changed and you re-occupied the Property as a principal place of residence in February 20XX.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 25-10