Capital Works - better done to an investment?

Hi,

I would like to make improvements and some repairs to an apartment that I'm currently living in. With my limited knowledge of tax laws, I know that as an investment property:

A. the repairs will be deductible and can be claimed in the year that they are incurred;
B. the capital cost of the improvements can be added to the cost base in a CGT event (e.g. selling the investment property); and
C. depreciation on capital improvements may also be deductible.

Given that I currently live there, should I move out and have the work done on the apartment as an investment property? That is...

1. move out
2. engage a property manager to look for a tenant
3. do all the repairs
4. make all the improvements
5. sign on a tenant
6. in 12 months time, end the tenancy agreement
7. move back in to enjoy the improvements

Also, if I was then to sell it as an investment property (e.g. have it leased out again), then can I still add the cost of the improvements to the cost base even though I was the owner occupier in between?

Any thoughts on this would be really appreciated.

Thanks,
Baz

 

Initial repairs are capitalised and treated the same as improvements.

Cheers,

Rob