Depreciation for rental property window replacement

Updated: October 2023

tax deductions on windows

Tax Deductions for window replacement are calimable at either 2.5% pa or 100%. It all depends on how you go about it

Depreciation for rental property window replacement

Busted a window in your rental investment property and want to know if you can claim the depreciation on it?

Yes you can

And here’s how to do it

Are Window Replacements Tax Deductible?

Yes, replacing an old or damaged window in your investment property qualifies you for claiming the cost as a tax deduction. This appllies to both residential and commercial investment properties.

Broken windows that need replacing:
Firstly; if you, a Tradie or a tenant busted a window in one of your investment properties you can claim the replacement cost under the ATO’s tax legislation relating to repairs and maintenance expenses in an investment property.

That means the cost is fully tax deductible as an instant asset write-off.

This is great news

Here’s why: a window is considered a Capital Works item under division 43 of the tax legislation (not Division 40).
That means you can only claim the deductions at 2.5% of the fully installed price of your window.

But, if the window had to be replaced under repairs and/or maintenance than it’s fully deducted at 100%

Giving you a much bigger tax deduction that financial year.

Example: Say your tenant had a party and 4 windows got smashed.

Assuming you don’t have landlord insurance, you’ll have to foot the bill. Initially at least. Maybe you can claim some back from the bond. But in the immediate you’ll be the one paying the bill.

Let’s say those four windows cost $4,000 to remove, dump and replace.

If you were doing this purely for aesthetic reasons you’d only be able to claim 2.5% pa of that $4,000.

That’s a total $100/yr.

But, your tenants busted the windows, making it a repairs and maintenance item claimable at 100%.

So, instead of the pittance of $100/yr for 40 years, you get $4,000 straight up as a one-off deduction.

This brings me to aesthetic window replacement.

Claiming deductions for window renovations

When the window replacement is purely for improving the look or style of the property then it’s going to be a Capital Works deduction.

That means just 2.5% pa.
(If only someone accidentally broke that window or made it unusable…)

Old windows like this one may be cheaper to replace then restore. But the deductions could end up being a lot less

Tax Deductions for window repairs in Body Corporate

If you own an investment property in a Body Corporate arrangement, the cost to replace a damaged or old window may be covered by the Body Corporate Sinking Fund Forecast or Maintance Fund.
If this is the case, you won’t be able to claim the cost of the repairs directly. But you will be able to claim the yearly sinking fund forecast contributuions as a tax deduction.

This will in effect, cover the cost of window replacement

How to claim the tax deductions for your windows

If you’ve already got your tax depreciation schedule in place and working for you, all you need do is contact us and we’ll gladly update your report, adding in your new windows, at no cost.

Simply contact us and we’ll do the rest.

If you don’t yet have a depreciation schedule for your investment property set up, there’s no reason to wait.

I only say this as waiting too long can lead to lost deductions. Yes, the ATO has a ‘Sunset clause’ for how far back you can claim deductions.

If you check out our client portfolio you’ll see what kind of tax deductions our clients have been getting. It’s just a snippet of the total number of reports we’ve produced but I’m certain you’ll find a property very similar to your own there to compare.

If you found this article helpful, there’s a whole lot more useful info on our articles page.

We also have a lot of information for first time property investors here.

But the best place to start is usually the beginning, which is our tax depreciation home page.

This article was written by William Callaghan A.A.I.Q.S.
2nd generation Quantity Surveyor and founder of WRC Quantity Surveying

Published February 2023