Maximising Returns with Investment Property Repairs

CoggerGurry • September 11, 2023

Investing in real estate can be a smart financial move, offering a stable income stream and potential for capital growth. However, understanding how Australian tax laws impact initial repairs, capital improvements and renovations on your investment property is crucial. Below, we'll explore the tax implications of these expenses and how you can optimize your returns while staying compliant with tax regulations. 


Deductible Repairs vs Capital Improvements 


Repairs and maintenance expenses for your investment property can be claimed as immediate deductions. These are costs incurred to keep the property in its current condition and are fully deductible against your rental income for the same financial year. 


On the other hand, capital improvements, which enhance the property's value or extend its useful life, must be capitalized and depreciated over time.   


Initial Repair 


Have you have just bought an investment property and it requires repairs to get it up to scratch prior to renting?  These repairs will be considered initial repairs and will form part of the purchase costs for capital gains tax purposes and will not be a deductible repair in the current year.  It can be difficult to determine what is an initial repair versus a normal deductible repair so make sure you speak with your tax professional about this. 


Examples of common deductible repair expenses for investment properties include: 


1.  Fixing plumbing or electrical issues 

2.  Repairs to the roof, guttering, or downpipes 

3.  Painting and repainting 

4.  Replacing or repairing broken windows and doors 

5.  Repairing heating or cooling systems 


These expenses can significantly reduce your taxable rental income and increase your after-tax return. 


Effective Record Keeping 


To ensure you can claim these deductions, maintain thorough records of all repair expenses. This includes invoices, receipts, and documentation of the work performed. Accurate record-keeping is essential for substantiating your deductions if required. 


Leveraging Tax Benefits 


To maximize your returns while adhering to Australian tax laws: 


  1. Plan your repairs carefully:  Strategically group smaller repairs within the same financial   year to maximize deductions. 
  2. Consult a tax professional: An experienced tax advisor can help you navigate our tax laws, ensuring you make the most of available deductions. 
  3. Depreciation deductions: For capital improvements, remember to claim depreciation deductions over the prescribed recovery period. 


Conclusion 


Investment properties can offer financial advantages, but understanding how our tax laws impact spending on repairs is vital. By distinguishing between repairs and capital improvements, maintaining meticulous records, and seeking professional advice, you can minimize your taxable income and enhance your investment property returns while remaining compliant with local regulations. 



Please note that tax laws can change, so always consult with us for the most up-to-date guidance tailored to your specific investment property situation. 

Understanding the new 20% student loan reduction

By Cogger Gurry • September 25, 2025
The Australian government’s promise to cut student loan debts by 20% has now become law. If you’re one of more than three million Australians who have a student loan, you’re probably wondering what this means for you and when you’ll see the benefits. The change applies to all types of student loans, including VET Student Loans, Australian Apprenticeship Support Loans, and even older schemes like the Student Financial Supplement Scheme. If you had an outstanding student loan debt on 1 June 2025, you’re eligible. The reduction is calculated on your debt balance as at that date, before the annual indexation was applied. Even if you’ve made payments since June or completely paid off your loan after that date, you’ll still receive the full 20% reduction based on what you owed on 1 June. If you’ve already paid off your loan since 1 June, the reduction might actually put your ATO account into credit, potentially resulting in a refund to your bank account (as long as you don’t have tax debts owing). If you’d already paid off your student loan completely before 1 June 2025, unfortunately you won’t benefit from the 20% reduction. The relief only applies to debts that existed on that date. The ATO’s responsible for applying the change, and is currently updating its systems to process these reductions. Most people should see their 20% reduction applied before the end of 2025. You don’t need to do anything to receive the reduction – it will be applied automatically. The ATO will notify you when it’s been processed, and you’ll be able to see your new lower balance through your myGov account or the ATO app. Don’t delay lodging your tax return while you wait for your changed loan balance to appear in your MyGov account. There’s no benefit in waiting, and you should continue with your normal tax obligations. Remember to update your bank details with the ATO if you’re expecting a potential refund, and if your loan gets paid off completely, don’t forget to tell your employer to stop withholding additional amounts from your pay. Please contact our office if you have any questions or queries - 03) 5571 0111 

Celebrating Kieran Neeson’s Appointment as Principal

By Cogger Gurry • September 24, 2025
Celebrating Kieran Neeson’s Appointment as Principal

Making Electronic Signing Easier for You

By Cogger Gurry • August 29, 2025
We’re excited to share that we’ve upgraded our client signing experience—now powered by FuseSign! This intuitive, secure platform lets you sign documents in minutes (not days), straight from any device, and is simple to use. There’s no need to download apps or remember passwords - just click the link, review your documents, and sign. With industry-leading security and a smooth, hassle-free process, signing important documents has never been faster or easier. You can find out more about FuseSign Here
More Posts