Repairs to the property incurred immediately after purchase are considered capital works and must be depreciated. Significant structural changes and improvements can be claimed at a rate of 2.5% per year over 40 years. Costs to repair or maintain the property during the term of the lease can be claimed as an immediate deduction. If John arranged for a Depreciation Schedule from a Quantity Surveyor additional depreciation can be claimed on the chattels of the property. However, from 1 July 2017 you may not be able to claim a deduction for a decline in value of certain second hand assets.
Property investors can also claim many of the initial costs of investment such as those incurred when drawing up a lease, broker fees, advertising and the like. Certain borrowing costs such as loan establishment fees are generally deducted over 5 years. Other acquisition costs are not claimable as a deduction and must be added to the cost base of the property, these can include legal costs, stamp duty and agent commission.
