Tax time tips: Repairs and maintenance – what you can claim

It’s tax time! We thought we’d remind you about the deductions you can claim by performing repairs and maintenance on your investment property.

What are repairs and maintenance?

According to the Australian Taxation Office (ATO) repairs are any work that is carried out to remedy a defect. For example:

  •     Replacing a window that is broken in a storm
  •     Repairing a fence that has fallen down

Maintenance is work that is done to prevent deterioration. For example:

  •     Maintaining air-conditioning units
  •     Painting a property

You can claim a deduction for the costs you pay to repair and maintain your investment property in the year that the work is carried out.

You can’t claim repairs and maintenance that are not directly related to wear, tear or other damage that occurred due to the renting out of the property. These fall under the ‘capital expenses’ label and can be claimed as a capital works deduction at a rate of about 2.5% per year.

With anything to do with tax, there are caveats. In the case of repairs and maintenance, you can’t claim any deductions for work performed on your property prior to it being rented out – even if you’re carrying out the repairs to make the property suitable for renting. This is because at the pre-rented-out stage, the property is not an income-producing asset.