Claiming Depreciation for painting a rental property
Planning on painting your investment property – or wondering when best to paint to maximise tax deductions?
Can you claim depreciation for painting a rental property?
Yes, you can claim depreciation for painting a rental property. Even if you didn’t pay for it.
I get a lot of clients calling asking when they should paint their property for the most tax advantageous outcome.
But of course it’s not a straight forward answer
Additional questions need asking.
- Is the property currently your principal place of residence?
- Are there tenants in place?
- Will you be kicking out the tenants to paint?
- Are you doing patch up painting or a full recoat?
- Are you painting internally or externally- or both?
- Are you hiring a painter or going to DIY the work?
- What property type do you have: Commercial or residential?
Let me explain:
Painting is considered a Capital Works item under ATO tax legislation.
This means you can claim it as a tax deduction.
How quickly you can write off the expense depends on what you painted, how much you painted and when you painted it.
Claiming paint repairs as tax deductions
If you’re doing paint touch ups here and there, the ATO considers this a Repairs and Maintenance item. That means you can claim the cost of the painting at 100% write off in the financial year the expense occurred.
100% instant write-off is a much better deal than when you do a full repaint and can only claim it at 2.5% pa.
Claiming tax deductions on a full repaint
If you repaint your entire rental property. Be it inside, outside or both, you shift from doing minor touch up work and into full Capital Improvements work.
And that means you have to follow ATO guidelines, only claiming the costs at 2.5% pa. over a 40-year period.
2.5x 40 = 100%
So ideally you would plan your painting so that you do just one room at a time – qualifying for the 100% instant write-off category.
Tax Deductions for DIY investment property painting
DIY painters cannot claim their labor as a cost… unless they also include the labor as income earned in their tax return. (The ATO never misses out on an opportunity to tax you).
So for the most part, the DIY painter can only claim the paint and painting supplies at tax deductions.
The paint itself gets deducted at 2.5% pa while the disposables like paint brushes, painters tape, drop sheets, etc can be claimed at instant asset write off items – claimable as a 100% deduction in the financial year they occurred.
Personal Notes on DIY Painting
When painting your own property you can save a lot of money in labor costs. As a Quantity Surveyor I see hundreds of painter’s invoices every year.
Currently, a new house paint job inside and out (slab on ground house) is around $25,000. If you DIY it, the paint, materials and disposables will cost you about $2,000. So you can save a lot of money. But it will take you several weeks to do.
Tax Deductions for external painting of investment properties
When painting your rental property externally – even if its the swimming pool – you get the same tax deduction benefits as you do with internal painting. Though there may be a few more paint touch ups claimable as repairs and maintenance.
I see time again that landlords have to repaint downpipes and entry doors. Well before the paint’s normal life is over.
That’s because downpipes get smashed up by cars, bikes and skateboards all the time.
It’s similar for entry doors. They get rough treatment so need to be maintained with fresh paint often.
Fortunately you can claim that cost as 100% write off.
New Home Painting Depreciation
When you have a new build – the painting is typically included in the builders turn-key price. Your quantity surveyor will not separate the painting costs as an individual item in your depreciation schedule.
Painting will be rolled into one lump sum with the rest of the Division 43 items and claimed at 2.5% pa in your yearly tax returns.
This includes the building, painting, tiling, landscaping and many more capital works items.
Tax Deductions for painting by previous owners
Unless your house is brand new, there’s a good chance a previous owner has given it a paint job before.
Just like landscaping, you can claim the cost of the previous owners paint jobs even though you didn’t pay for it. Because you actually did.
When you purchased your property you paid a little bit more than you would have, had the property not received that older coat of paint. So you can claim that capital improvement as a tax deduction.
- The paint job has to be newer than September 1987
- You can’t claim for all the even old coats of paint underneath the current one
So do your research and choose a qualified quantity surveyor who really knows investment property deductions.
Tip: make sure they send a qualified quantity surveyor to your house to do a physical inspection.
Many send an unqualified tick-sheet guy.
Some don’t send anyone at all!
Have any Questions?
Simply get in touch with me and I’ll personally address any questions you have.
If you found this helpful, you may also find some of my other articles beneficial too. And to see some real life examples of what our clients have been receiving in tax depreciation deductions, check out our Client Portfolio page. But it’s usually best to start at the beginning