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    Default Can I claim costs in my tax for preparing a house for rent?

    I was told that I could claim the costs of preparing my house to be rented, in my income tax. So I went ahead and paid for the place to be cleaned, an electrical safety check, electrical appliances serviced, servicing gas appliances, pest control.

    Anyway I gave my accountant all this information and she's telling me these are capital items and they will come off capital gains tax when I sell the property? I don't get it.


    I built the property in 2009 and was an owner occupier until April this year when we moved and I rented the property out.

    She hasn't included any depreciation and maintains that the items I listed above are capital because they were "initial repairs".

    I've been reading on the ato website and initial repairs seem to be about repairs you do to a recently acquired property but my property isn't newly acquired. I've had it 7 years!

    Anyway I'm clearly not understanding and wondering if one of the accounting hubbers can explain it to me in a way I can understand!

    TIA

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    I'm no accountant, but from what i understand, you have to be making money off the property before you can claim deductions, so repairs done *before* renting it out aren't counted as deductions (but can reduce your capital gains later when you sell, if needed). Happy to be corrected by someone who actually knows what they're talking about though ☺

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    TheGooch  (18-10-2016)

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    My folks holiday house they rent out on the odd occasion to help them pay for water, ins, council rates etc and they include all of that in their tax each year and have so for the last 22 years since they built the place. They don't generate much as soooo many people do what they do
    Now in this spot so it's tough competition but they are fussed as they use it aswell

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    TheGooch  (19-10-2016)

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    Default Can I claim costs in my tax for preparing a house for rent?

    Quote Originally Posted by JustJaq View Post
    I'm no accountant, but from what i understand, you have to be making money off the property before you can claim deductions, so repairs done *before* renting it out aren't counted as deductions (but can reduce your capital gains later when you sell, if needed). Happy to be corrected by someone who actually knows what they're talking about though ☺
    This is how I understand it as well. Well from the day the house becomes 'available' for rent, I.e., the date agents are telling prospective tenants that could move in from, even if no tenants move in on that date. So if the ad on realestate.com says the house is available from 1 March but tenants don't move in until 15 March then expenses from 1-15 March would still be claimable.

    FYI - I'm not an accountant but rented out houses that I'd previously lived in
    Last edited by babyno1onboard; 19-10-2016 at 05:40.

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    TheGooch  (19-10-2016)

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    Your accountant is correct I'm afraid. Work done on the house in preparation for renting it out is not tax deductible - but can be used to reduce capital gains when you go to sell so make sure you keep good records.

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    Who gave you the initial advice? Was it an accountant? I feel for you, I'm guessing you wouldn't have got this things done if you didn't think they were claimable, or at least would have waited until tenants were in the house. How crappy

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    Mind you, i had a friend tell me they had advice that those sort of repairs before tenants moved in *would* be deductible, so long as it was within the same tax year. That's not how i understand it though, as i said above.

    Shout out to actual accountants? @witherwings and @turquoisecoast i think?

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    Quote Originally Posted by babyno1onboard View Post
    This is how I understand it as well. Well from the day the house becomes 'available' for rent, I.e., the date agents are telling prospective tenants that could move in from, even if no tenants move in on that date. So if the ad on realestate.com says the house is available from 1 March but tenants don't move in until 15 March then expenses from 1-15 March would still be claimable.

    FYI - I'm not an accountant but rented out houses that I'd previously lived in
    This is correct. Sorry

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    Default Can I claim costs in my tax for preparing a house for rent?

    Quote Originally Posted by TheGooch View Post
    I was told that I could claim the costs of preparing my house to be rented, in my income tax. So I went ahead and paid for the place to be cleaned, an electrical safety check, electrical appliances serviced, servicing gas appliances, pest control.

    Anyway I gave my accountant all this information and she's telling me these are capital items and they will come off capital gains tax when I sell the property? I don't get it.


    I built the property in 2009 and was an owner occupier until April this year when we moved and I rented the property out.

    She hasn't included any depreciation and maintains that the items I listed above are capital because they were "initial repairs".

    I've been reading on the ato website and initial repairs seem to be about repairs you do to a recently acquired property but my property isn't newly acquired. I've had it 7 years!

    Anyway I'm clearly not understanding and wondering if one of the accounting hubbers can explain it to me in a way I can understand!

    TIA
    The repairs & maintenance and pest control are capitalised, as are any other expenses incurred like interest, rates etc, up until you put the property on the market.

    When you say she isn't claiming depreciation, are you referring only to the items that you spent money on recently, or is she not claiming any depreciation at all?

    If it's the latter, I would be asking why. A property built in 2009 will have significant depreciation/building write-off.

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    TheGooch  (19-10-2016)

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    Default Can I claim costs in my tax for preparing a house for rent?

    Unfortunately not deductible. On another note, if this property was your main residence prior to renting it out then if you haven't already done so, now might be a good time to get a valuation on the property (even if just from a real estate agent) as you may need to know the value of the property when you started renting it out to help you work out your capital gain. Might be worth checking with your accountant about this.
    Last edited by ShannyAnny; 19-10-2016 at 18:19.

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    TheGooch  (19-10-2016)


 

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