Is House Painting Tax Deductible? Understanding Your Tax Benefits

When you own or rent out property, there are capital expenses you must deal with yearly, especially when you have investment properties. As a result, the costs incurred for repair and maintenance work are quite high.

But what first-time investors may not know is that you can claim tax deductions on certain kinds of repair works. In this article, we will help you understand your tax benefits better as a real estate investor.

For instance, is house painting tax deductible? Can you claim capital expense for different paint jobs around the house?

Here’s everything you need to know.

Difference Between Repairs, Maintenance & Improvements

Before claiming a tax deduction, it’s important to check whether a particular activity addresses the guidelines set by the Australian Taxation Office. If you’re lacking expertise in this area, get in touch with a reliable accountant or tax expert.

Essentially, any expenses incurred as a result of repair and maintenance of an investment property can be claimed immediately as a tax deduction. But you can only claim the expense for the work done within the same financial year.

Another condition dictates that the rental property must be occupied by a tenant or advertised for rent. If neither conditions are met, you cannot make any claims for the work done or the expense behind it.

But what constitutes improvements, repairs, and maintenance?

Repairs as Defined by the ATO

As dictated by the ATO, repairs done on an investment property will usually entail mending structural damage or defects. General wear and tear of the rental property may include a series of repair works, like:

• Repairing a broken air conditioner or water heater
• Replacing damaged roof tiles after a heavy storm
• Restoring a broken window or any other fixture
• Resealing a damaged bathroom tub to stop leakage

Maintenance as Defined by the ATO

Maintenance is any work carried out to prevent structural integrity of the property from deteriorating. The ATO also places fixing an existing damage under the maintenance category, offering immediate deduction for jobs like:

• Conducting pest control to rid the space of rats, insects, and termites
• Finishing a paint job to cover imperfections on walls, furniture or fixture
• Cleaning, gardening, landscaping, and basic maintenance of real estate

Improvements as Defined by the ATO

While a repair restores something back to its original form and maintenance prevents further deterioration, an improvement is quite the opposite.

Improvements include upgrading parts of your home or furnishing, to increase your property’s worth. The reason why property owners generally make improvements on a rental space is to increase its market value or to generate more income.

Common examples of improvements include: 

• Remodelling an outdoor space to make it bigger and more usable
• Extending the size of a bedroom, bathroom, or kitchen space
• Adding a swimming pool, patio, gazebo, and landscaping

What Can’t You Claim as a Tax Deduction?

The ATO doesn’t categorise replacements under repairs and maintenance. A good example is a broken down bathtub in your rental property, that for instance needs replacement entirely. Though you can’t claim tax deductions on a replacement, you can claim it in the form of a capital improvement.

What Do You Mean by Capital Improvement?

Capital improvements are simply put, improvements made on a property, as defined by the ATO, where you can claim 2.5% of the costs each year. Capital works deductions are only plausible for the years that the property is rented out.

To determine how much you can claim, hire a quantity surveyor and get a tax depreciation schedule made for your investment property. When you buy a rental property or convert your home into one, there are certain assets you can claim.

But only a professional quantity surveyor can analyse, inspect, and estimate which assets, may it be fixtures or appliances, are worth depreciating. In your depreciation report, you’ll have a detailed idea about your capital allowances.

Is Painting Your House Tax Deductible?

House painting can be an immediate tax deduction when you want to improve, maintain, or repair your interiors or exteriors. You can claim deductions for a fresh coat of paint by documenting the process correctly, under the right conditions.

Does Your Property Suffer From Worn-Off Paint?

You can make tax claims under the maintenance category when your property has worn-off paint that’s peeling off from the surface.

You can also include the cost of cleaning and priming the surface before the paint job occurs. If you’re spending entirely on repairing damage or to hide away imperfections, you can claim the full amount.

In cases where a rental property is unoccupied for months (owing to an unexpected cancellation, weather condition, or unsuccessful advertising), the ATO may still allow you to claim deductions.

Do you need to paint newly installed furniture?

Such paint jobs are potentially considered an improvement, helping you raise the property’s rental value in the process. Under the improvement category, house painting becomes a deductible expense.

Painting a home’s partition walls, doors, windows, and fences are also eligible for capital works deduction claims. This includes installing new cabinets and cupboards in a property that needs to be painted.

Before Submitting a House Painting Claim

When you’re making a tax deduction claim, it’s important to address the requirements set by the ATO, like providing accurate details about your financial history.

• Declare your earnings for the entire tax year, including short and long term earnings from a property that has rental income producing ability.
• Mention insurance payouts and bond money (or rental deposit) as part of your rental earning so they can be included in your claim immediately.
• Record and document your expenses and rental income to back up your claim when the time comes to file property taxes at the end of the year.

Looking to Make Tax Deductible Improvements to Your Home? Contact Hunter Valley Painting

At Hunter Valley Painters, we work with qualified contractors who can help you determine your home’s interior and exterior painting needs.

Regardless of the type of property you own, our experienced team can provide residential painting services and ensure high-quality workmanship.

If you’re unsure about capital gains tax, speak to an expert to understand whether you can make any claims around house painting.

Contact us for more information.