Repairs vs capital improvements on Australian rental properties
The repairs vs capital question is one of the most common rental property tax mistakes. The classification changes whether a cost is generally deductible in the year you paid it, claimed over many years as capital works, or treated as a depreciating asset.
Practical checklist
- Describe the work in plain language
- Note when the damage or wear occurred
- Confirm whether the work restored or improved the item
- Check whether the whole item was replaced
- Flag any work done before the property was first rented
- Attach the supplier invoice
Common mistakes
- • Treating a full kitchen replacement as a repair
- • Claiming initial repairs in the first year of ownership
- • Failing to separate the labour and materials portions of a mixed job
- • Not flagging improvements that should sit in a capital works register
How the app helps
- • A guided decision-tree for every repair entry
- • Educational flags such as 'Likely repair' or 'Likely capital improvement'
- • Reminders to upload invoices and add notes for your accountant
- • A dedicated capital works and depreciating assets register
Frequently asked
Frequently asked questions
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