Often people buy a rental property that needs a bit of work done to it - they then get the keys and undertake repairs and maintenance that can cost a few thousand dollars. The property is then looking all good and they put it to the market to find a tenant.

In this instance all of the costs to repair the property will be capitalised - added to the purchase price of the property - no tax claims available.

This is because the rental has to be available for rent for costs to be claimed.

So the tip is to purchase the property - put it to the market to find a tenant and then undertake the repairs. This way there is a much better chance of being able to claim the costs in your income tax return which will save you tax. Do keep a record of what was done though as there still needs to be a distinction between what is an expense and what is a capital improvement.

Posted 1/10/2014 – Updated 7/10/2014

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