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Edited version of private advice
Authorisation Number: 1052323972327
Date of advice: 08 November 2024
Ruling
Subject: Rental property deductions
Question 1
Are the expenses incurred as repairs on your rental property deductible under section 25-10 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer 1
Yes, your expenses meet the requirement of Taxation Ruling TR 97/23 Income tax: deductions for repairs. Therefore, you can claim a deduction for the cost of the repair of the XXX on your rental property.
Further information about repairs can be found by searching 'QC 102752' on the ato.gov.au.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You were renting the Property.
The Property was purchased on XX/XX/20XX as the principal home until XX/XX/20XX.
The Property was available for rent from XX/XX/20XX up to XX/XX/20XX.
You moved back into the property on XX/XX/20XX.
The building inspection report after the purchase of the property reported a good drainage system.
The tenants reported significant water pooling and flooding all over the property in 20XX after a storm.
Several plumbers were engaged to find the root-cause. This included camera scoping and the water was pumped out of the property. However, the root cause for this high-water retention around and under the house was not identified.
The investigation led to find the terracotta pipes leading to the storm water drainage was blocked by tree roots.
The expenses include the costs of clearing the roots in the pipes and the installation of Aggie pipes from the rear garden up to the front of the property to channel away from the storm water and the pooling of water to be liveable for the tenants.
The taxpayer contacted the XXX Council to review the situation and they suggested approaching the neighbour's because all the storm water is gushing down into the property since it is at the end of the slop. The XXX council has no record of any assessment of the neighbour's house because it is a private drainage system.
This is a replacement of the original pipes at a cost of $XXXX on XX/XX/20XX.
The Property has XXX insurance, but the costs are considered a repair and maintenance, therefore not reimbursed.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 25-10