Edited version of private advice

Authorisation Number: 1052217458356

Date of advice: 7 February 2024

Ruling

Subject: Rental deductions

Question

Are you entitled to a deduction under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997) for the full amount of the special levy that was paid to the body corporate for repairs to your rental property?

Answer

Yes.

You were required to pay a special levy to finance work to be carried out in areas of the unit complex. The works undertaken are to rectify damage that has occurred to the Property. The repairs restore the efficiency of the function of the Property without changing its character and are not considered to be capital in nature. You are therefore entitled to a deduction for the expense incurred for the special levy.

This private ruling applies for the following period:

Year ending X June 20XX

The scheme commenced on:

X July 20XX

Relevant facts and circumstances

This private ruling is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this private ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You purchased the Property in 20XX.

After the purchase, you leased the Property.

The Property is located within a complex of units.

You received a letter in 20XX from the Owners Corporation regarding concerns about cracking in the building.

An Engineering Company was engaged to conduct an inspection of the building.

The inspection took place in 20XX.

It was determined that building repairs were required to perform underpinning and external rectification works.

A construction company was engaged to carry out the work.

A special levy of $XXX was due and payable by you to contribute to the amount needed for the repairs to be carried out.

You paid this amount.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 25-10