Help an accounting dummy please

[TMNT]

ok, so i pretty much failed anything to do with accounting at highschool and uni

hypothetical situation

payg income $15k
get a few $k in depreciation from other ips

buy another ip, spend $10k reno, however very little or no depreciable items purchased

does the reno cost of $10k go on the capital cost of the IP and not in the way of a tax deduction on income and will only be relevant when calculating CG down teh track?, and if I decide never to sell, keeping receipts, not paying tradies with cash only, isnt going to have much effect as they are not deductions

or if my income was above the tax free threshold then since its a capital purchase, other then depreciation, which is zero in this instance, it wont change my payg income what so ever?


thank you for listening to a dummy

 

[Aaron_C]

Capital purchases are added to the cost base to be depreciated later or to reduce CGT if you sell, regardless of your PAYG income.

 

[AXXO]

If I understand your question properly the 10K reno costs of the IP are capital works and tax deduction of 2.5% for special building write off is allowed.

It's effectively added to the cost base of the IP with an adjustment on sale to reduce that cost base by the amount of special building write amounts claimed as a tax deduction over the years.