Topics on Rental Properties (2) 



Correctly classifying improvements and deductible repairs for rental properties 


Making the distinction between a repair and an improvement for expenditure incurred in relation to a rental property is important. This is primarily because work done to a rental property that qualifies as a ‘repair’ is generally deductible under S.25-10, whereas work done to a rental property that constitutes an ‘improvement’ is not deductible under S.25-10. Refer also to Taxation Ruling TR 97/23. 

Specifically, under S.25-10, a landlord is entitled to claim a deduction (in whole or in part) for repair expenditure incurred in relation to a property where: 

  • at the time the expenditure is incurred, the property is being held or used (wholly or partly) 

for income-earning purposes; and 

  • the expenditure is not of a capital nature. 

Where the expenditure is not a repair for the purposes of S.25-10 (i.e., it is a capital improvement) expenses will have to be further analysed to determine if it can be written-off under the capital allowance rules in Division 40 or Division 43 of the ITAA 1997 

  • Should you have any queries, please contact Tax Ideas Accountants & Advisers on +61 2 83181545 
  • Alternatively, you can book an appointment in ourlive calendar.  


Written by Panbo Ye

I help people discover POWERFUL unknowns in Tax Ideas | Wealth Strategies | Retirement Planning | Finance Solutions!

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