Edited version of private advice

Authorisation Number: 1052226640459

Date of advice: 27 February 2024

Ruling

Subject: Rental deductions - repairs

Question 1

Are the full expenses associated with the restoration of termite damage to your rental property a repair and therefore deductible under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

Section 25-10 of the ITAA 1997 provides that you can deduct expenditure you incur for repairs to premises that you held solely for the purpose of producing assessable income.

Question 2

Does the replacement of the timber frame with materials that comply with current building standards, while replacing other materials on a like-for-like basis, still allow for the entire cost to be deductible under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes.

This ruling applies for the following period:

Year ended XX XX 20XX

The scheme commenced on:

XX XX 20XX

Relevant facts and circumstances

You are the sole owner of a property that you purchased in 20XX.

The property was built in 19XX.

You have used the property to produce rental income since XXX.

Termite damage was discovered during the rental period, necessitating repairs to a section of the house.

The repairs, costing $XX, included replacing parts of multiple affected areas of the property.

The repair work was carried out between XX 20XX and XX 20XX.

The materials used were like-for-like replacements, except for the timber frame, which was upgraded to meet current building standards from a non treated timber to a treated pine.

When the building was constructed more than XX years ago, termite protection systems were not used as per the supplied pest inspection report.

A pre-purchase inspection report in 20XX indicated no termite damage or structural issues.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 25-10