Queensland has been hit hard in the past few weeks, first with Cyclone Debbie and then with the resulting floods.  We sincerely hope that you and your families are safe and that the clean-up process is as quick as possible.

If your rental property has been damaged and repairs are required it's important that you understand the tax consequences before you outlay any money so that you can make an informed decision.

Repairs and maintenance relate to wear and tear or damage such as replacing worn or damaged curtains, replacing broken windows and replacing the plaster board in a wall damaged by flood inundation.  These types of expenses are fully tax deductible in the year they occur.  

However, not all outlays are repairs and maintenance; some expenses are classified as capital and are deductible at the rate of 2.5% over 40 years such as:

• Replacement of an entire structure such as a complete fence or building
• Improvements, renovations, extensions and alternations such as replacing a fibro wall damaged by flood with a brick wall
• Initial repairs such as remedying defects, damage or deterioration that existed at the date you acquired the property

Your insurance policy should cover damage from natural disasters however we encourage you to check your current policy for coverage and update if necessary.  Please also remember that if you receive an insurance payout for repairs, the amount you receive should be included in your assessable income. 

C.T. Harris & Company is available to help with any queries or concerns you may have about repairing your rental property.