Why do we need to repair and maintain the property?
Is it just to keep the value or we have other benefits?
First we have to understand the difference between “repairs/maintenance” and improvements.
A repair is usually partial work to restore something to its original state, eg repairing part of a fence by replacing few palings.
The ATO provides the explanation as “work to make a good remedy defects in, damage to or deterioration of the property:
For example: – Replace part of the guttering or windows damaged in storm;
- Replacing part of a fence damaged by a falling tree branch;
- Replacing electrical appliances or machinery”
Maintenance is work that prevents deterioration or fixes deterioration eg painting the property or oiling the garage door.
The ATO provides an explanation and examples as follows:
- Painting a rental property
- Oiling, brushing or cleaning something that in otherwise in good working condition,
- Maintaining plumbing
An Improvement makes something better or provides something new which is more desirable and valuable to the property.
If you replace an old timber fence that falling apart by steel or brick fence, you are improve the appearance and integrity of the fence/property.
The ATO provides the following examples:
- A new stove
- New kitchen cupboards
- Building garage or carport
- Removing or adding internal wall.
Thus, in one hand you have the deduction of Tax as your expenses, but more significant is the result of your property long term existence.