What's the difference between a repair and an improvement?

Repairs are considered work completed to fix damage or deterioration of a property, for example replacing part of a damaged fence.

Maintenance is considered work completed to prevent deterioration to a property, for example oiling a deck.

Any costs incurred to repair or maintain a rental property can be claimed as an immediate 100 per cent deduction in the year of the expense.

A capital improvement occurs when the condition or value of an item is enhanced beyond its original state at the time of purchase. This must then be classified as either a capital works deduction and depreciated over time or as plant and equipment depreciation. An example of a capital works deductions could be replacing the kitchen cupboards. If any plant and equipment items are removed and replaced, for example an air conditioner, this will also be considered a capital improvement.

Investors considering completing any work to their property should contact a specialist Quantity Surveyor for advice before they start work.

To discover what can be claimed for any investment property, speak with the expert team at BMT on 1300 728 726 or call in at your local TaxAssist Accountants.

Article provided by BMT Tax Depreciation.

Date published 13 Dec 2019

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.