Edited version of private advice

Authorisation Number: 1052335719701

Date of advice: 27 November 2024

Ruling

Subject: Rental property expenses

Question

Are you entitled to a deduction for your share of the cost of replacing the roof on your co-owned rental property?

Answer

Yes.

The replacement of the whole roof of the rental property was required due to the extent of deterioration. It is not the replacement of an entirety as the roof is only a part of the building with the building being the entirety. Also, based on the facts of your case, the replacement is not considered an improvement or an initial repair. Therefore, it is a repair that is deductible under section 25-10 of the Income Tax Assessment Act 1997. For more information see Taxation Ruling TR 97/23 Income tax: deductions for repairs.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

You and a co-owner own the property.

You and the co-owner purchased the property as tenants in common in equal shares more than a decade ago.

The property was originally your main residence.

More than five years you moved and started renting the property out. It has been used to earn rental income since then.

The roof of the property had deteriorated. This has caused damage to the ceiling due to water leaking to the inside of the property.

The deterioration of the roof was such that a replacement roof was required.

The roof was replaced with similar material. This was less expensive than replacement with the original materials.

The work was completed by roof repairers.

The cost of the replacement was $X, including GST.

You paid by instalments between XX XXXX 20XX and the completion of the work on XX XXXX 20XX.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 25-10