But it is important to be able to make this distinction as the difference between repairs and improvements are treated in a totally different manner for taxation purposes and can have long-term ramifications should you get it wrong.
If the work you are undertaking involves fixing up damage caused by wear and tear, the expense is likely to be a repair and is tax deductable.
However, when you are replacing old materials with new materials and enhancing the property beyond its original state, the work is more likely to be considered an improvement and will therefore be added to the cost of your property, representing a depreciable asset.
It’s advisable to seek professional accounting advice when undertaking such projects, particularly when there are significant expenses to the project as these can often trigger the eye of the ATO.
If you are considering creating wealth through property investment please feel free to contact us for free professional advice.