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IP Accounting question

Discussion in 'Accounting, Tax & Legal' started by Glebe, 24th Jul, 2007.

  1. Glebe

    Glebe Well-Known Member

    Joined:
    15th Aug, 2005
    Posts:
    932
    Location:
    Sydney, NSW
    Hey there,

    I settled on a house in January.
    I spent $$$ performing maintenance in February.
    I also had interest costs in February.
    I rented it out in March.

    Are the costs in February tax deductible?

    Thanks!
     
  2. coopranos

    coopranos Well-Known Member

    Joined:
    11th Oct, 2006
    Posts:
    498
    Location:
    Perth
    The maintenance I would say is pretty unlikely, this would probably be considered an improvement and thus would be a capital expense (reduce cgt on sale later on).
    The interest and any rates etc, no worries. They are the holding costs of an asset which you have intention of producing a taxable income, so fully deductible (Steele's case)
     
  3. JamesGG

    JamesGG Member

    Joined:
    3rd Jul, 2007
    Posts:
    21
    Location:
    Melbourne
    Hiya,

    Coopranos is correct. After only owning the property for one month, it has not had time to deteriorate to a condition that warrants repairs. The basic rule of thumb is that any work done to the property that results in it being better than when you purchased it, will need to be capitalised and depreciated.

    However, expenses do become deductible as soon as you have purchased the property if your intention is to rent it out for income.

    Cheers

    James.
     
  4. Glebe

    Glebe Well-Known Member

    Joined:
    15th Aug, 2005
    Posts:
    932
    Location:
    Sydney, NSW
    OK thanks guys. So long as the interest is deductible, that's good enough for me.
     
  5. Rob G.

    Rob G. Well-Known Member

    Joined:
    6th Jun, 2007
    Posts:
    717
    Location:
    Melbourne, VIC
    Don't forget valuations for depreciable fixtures & any capital allowances.

    They are your non-cash expenses that you claim deductions for.

    Cheers,

    Rob