Underpinning Tax Deductibility for Investors 

Underpinning Tax Deductibility for Investors 

For better or worse, your home or investment property needs underpinning. The question as a property owner is: What is the overall tax effect?  

For owner occupiers in most cases, the tax effect will be moot. The only exception is, if you are a business owner and claim the business portion of your home for tax purposes. You can then you can also claim a portion of the underpinning costs against your business income. This can help lower your income tax bill and potentially get you some GST credits to lower your next BAS bill. As a business owner, this can become tricky territory, because if you claim deductions against the business portion of your home then there will be capital gain implications when you sell. Business owners should check the capital gain implications before claiming a tax deduction.   

For investors, the tax effect is a lot better. Underpinning is a costly endeavor, and while a normal repair bill is $500-$1,500 for a rental, underpinning can be in the tens of thousands. However, despite the price, underpinning is just a repair to the structural integrity of the building. Like any other repair, it is instantly tax deductible in the tax return of an investor. For some investors this could mean that the tax refund can be up to 47% of the cost of the repair. Ensure your accountant checks at the end of the financial year to take up the repair correctly in your accounts, as you could be leaving thousands on the table if its taken up as capital improvement rather than what it is – a repair.  

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