Edited version of private advice

Authorisation Number: 1052050710233

Date of advice: 27 October 2022

Ruling

Subject: Deductions - rental property

Question

Are you entitled to a deduction for your share of the repairs made to your foreign rental property under section 25-10 of the Income Tax Assessment Act 1997?

Answer

Yes.

The replacement of the window frames and doors are not considered to be a renewal or reconstruction of an entirety, they are not initial repairs or an improvement and the expense is in respect to an income producing asset.

The expenses meet the requirements of a repair in Taxation Ruling TR 97/23 Income tax: deductions for repairs and are deductible under section 25-10 of the Income Tax Assessment Act 1997. Further information about repairs can be found by searching 'QC 23635' on ato.gov.au

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are a resident of Australia for tax purposes.

You moved from Country A in 20XX and obtained your permanent resident status in 20XX.

You own a property in Country A that has been rented out since you left. It is managed by a property manager who laisses with the tenants and maintains the property.

The conservatory at the back of the house had timber framed windows and timber doors that were in a good condition when the house was first rented.

By late 20XX the windows were leaking and in a poor condition due to weather. This also resulted in the timber doors having rotted.

You replaced the window frames in late 20XX. You also replaced the conservatory doors and repainted where leaks had caused damage.

The dwelling was being rented at the time the expenses were incurred.

Repairs made to the windows:

•         you changed the windows from wood to PVC to prevent that same damage occurring in the future

•         there was no change in the function or operation of the doors

•         there were no structural changes to the wall around the windows

•         the replacement windows were not substantially different to the original windows.

Repairs made to the doors:

•         you replaced the doors as the wood had rotted due to weather exposure

•         you changed the doors from wood to PVC to prevent the same damage occurring in the future

•         there was no change in the function or operation of the doors

•         there were no structural changes to the wall or frame around the doors.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 section 25-10