Can I Claim My New Fence as a Tax Deduction?
Did you know that you may be able to claim the cost of installing or repairing a fence as a tax deduction? Here’s what you need to know to find out whether you can claim fence costs as part of your next tax return.
When it comes to taxes, are you a do-it-yourself type of person, or do you hire an accountant? Tax time can be a very stressful time of year for many people – there are so many rules, processes and cadences to be aware of so that you are claiming your income and deductibles correctly. You can benefit from a sizeable tax return if you do it right. The subject of what you and cannot deduct often plagues news outlets near the end of the financial year. As it differs so much between careers and investments, it’s hard to know what is and isn’t approved.
If you are an investment property owner, you’re likely already aware of some of the tax perks you benefit from. Advertising costs, loan fees, building depreciation and rates bills are just some of the expenses you may be able to deduct, partially or entirely, from your tax bill. However, you may be wondering if specific home improvements can be claimed. Does your investment house have a tired, sagging old fence? Good news – this may be a tax deduction!
Repairs and maintenance
Repairs and maintenance of your home and objects are nearly all eligible for tax deductions. However, they vary in the amount you can claim. ATO rules state that the repairs need to correlate with the wear and tear of the item. Emergency repairs, such as damage caused by a bushfire or storm, are typically immediately deductible for the total cost.
Replacing or improving on something that has degraded naturally over the years will either be a depreciation deduction or a capital gains deduction – you’ll still be able to claim back some of it, but not the entirety of the bill.
To be eligible for these tax deductions, you need to be undertaking these repairs to keep your home in a tenantable state. This requires you to have your home continually rented or available for rent over the last financial year.
How to claim your fence
Relating to that information, your new fence can fall under any of those deductible categories. Say that a new fence is needed due to the old one falling over in a storm – completely deductible. It can be seen as a security risk to your tenants not to have a working fence, which is why it falls under the emergency repair category.
However, if you upgrade said fence or replace a working fence with a new one purely to up the value of your home, this will not be the case. You will still be able to claim part of it back, but as a capital works deduction. This typically works out to be 2.5% a year for 40 years.
There is also a grey area when purchasing a new fence for an unfaced property, in that it will only be classed as a capital works deduction. Despite needing to buy a new fence for it be safe for tenants, you’ll technically be improving the quality as of what it was – therefore you will not be able to claim the total cost.
Maintenance of a fence is also considered a deductible expense. This is defined as the upkeep of a home feature that doesn’t quite qualify as a repair. For example, something that would fall under this would be the staining of a wooden fence. Staining wood helps prevent rot and termite attacks and preserves the wood quality for longer.
In addition to all of this, there is a separate section and set of rules for your garden maintenance. This may be relevant to you if you use hedges as part of your fencing line or if you have climber plants growing over your fence. You’re able to claim expenses related to the maintenance of these existing plants, but you will not be able to claim any new plant purchases.
Is replacing a fence tax deductible?,Is fencing an asset or expense?,What home improvements can be claimed on taxes?,What type of asset is fence?,is amortisation tax deductible in Australia,rental property fence depreciation rate,instant asset write-off,ato do repairs and maintenance rental property,farm deductions,repair and maintenance,rental property deductions, fencing.