Neil owns a rental property and during the year ended 30 June 2020 he spent $1,500 fixing up holes in the walls after the previous tenants damaged some of the walls in the rental property. Which of the following statements is most correct?
A) The maintenance costs would constitute a repair and so would be deductible under s25-10 ITAA97 and would not satisfy the rules for deductibility under s8-1 ITAA97
B) The maintenance costs would constitute a repair and so would be deductible under the first positive limb of s8-1 ITAA97 as costs incurred in gaining income and would not be deductible under s25-10 ITAA97
C) The repair costs would be capital in nature and so not deductible under either s25-10 or s8-1 ITAA97
D) A repair cost, such as those described, could be deductible under s8-1 but as they are specifically deductible under s25-10 ITAA97, only the specific provision applies

Question

Quizplus · Accepted Answer

The costs for fixing up holes in the walls after tenant damage would be considered repairs, which are typically deductible under s25-10 of the Income Tax Assessment Act 1997 (ITAA97) as they are expenses incurred in maintaining the property to generate income. While they could also potentially be deductible under the general deduction provisions of s8-1 ITAA97, when a specific provision (like s25-10 for repairs) applies, it is the specific provision that is used for the deduction.

Neil Owns a Rental Property and During the Year Ended