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Edited version of private advice
Authorisation Number: 1052238473988
Date of advice: 9 April 2024
Ruling
Subject: Rental deductions - repairs
Question
Are the full expenses associated with the repairs to the carport, back patio, guttering and awnings of 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.
This ruling applies for the following period:
Year ended XX X 20XX
The scheme commenced on:
XX X 20XX
Relevant facts and circumstances
You purchased a property on XX X 20XX.
You are the sole owner of the rental property.
You have used the property to produce rental income since the date of settlement on XX X 20XX to XX X 20XX.
The property was rented until you took possession on XX X 20XX, and the rental income was negotiated with each tenant by the managing agent.
On the dates of the above tenancy, the property was always tenanted except for a short period when the agent was looking for a new tenant.
There were multiple tenancies in the above period.
On XX X 20XX, you took possession of the property for private purposes.
Upon taking possession of the property, you noticed that there was significant damage to the carport and patio and other external damage in various areas.
The structural posts had rusted where they were connected to the concrete pavement of the patio. This was dangerous as half of the aluminium roof structure was vulnerable.
The state of the patio awning and the carport became rusted, dilapidated and unsafe in parts.
The guttering had disintegrated to become unsafe and was causing flooding issues for your neighbour.
During the tenancy, the managing agent had not made you aware of any of these damages.
You made contact with several builders to repair the damages, but due to COVID-19, no builder would commit to doing the work before the end of the 20XX calendar year.
On XX XX 20XX you signed a building repair contract with XX for a total cost of $XX.
In XX 20XX, the repair works were completed.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 25-10