Tax Deductions upon moving into a former IP ?

[Archer]

Hi all,

Just wondering if anyone is aware if you can claim capital costs when moving into a property that was formerly an IP.

I have rented a house out for 10 years (rented out since it was brand new) and we are about to move back in, I believe that the cost of repairs to bring it back to its original state (ie painting etc) are deductable, however what about replacing worn carpets or tattered old blinds ?

Anyone come across this before ?

Cheers,

 

[MattR]

Try this link

http://www.ato.gov.au/individuals/content.asp?doc=/content/00096828.htm&page=8&H8

You may be able to cliam the repairs but the ATO will view the entire replacement items as capital in nature and as you will be living it it then no depreciation for them. If you sold then these could be factored into CG's.

I would advise caution here as I believe from their "Interest deductions" letter this year, and other bits and pieces that I've read, that the ATO will be doing a lot more audit activity on rental properties. And where they see large deductions one year for R&M and no rental income in the next, then as Pauline says "ploise exploin" will be voiced by the ATO.

 

[Archer]

Thanks Matt I thought that I might be struggling to claim those items,

Cheers,

Arch

 

[Rob G.]

IT 180 suggests ...

If it was previously rented THIS financial year - at least get a quote for repairs and COMMIT to pay this year. Even if you don't physically hand over the cash until next year, undertake the liability to the relevant tradesmen.

Cheers,

Rob