Usually if you do improvements to a rental property, such as replacing, removing or installing walls, the cost of the improvements would need to be written off over 40 years. This results in a deduction of 2.5% each year, which doesn't save a lot of tax. However, if your property has asbestos you may be eligible for an instant deduction for removal or other asbestos related remediation.
Section 40-755 of the Income Tax Assessment Act 1997 allows an immediate deduction for capital expenditure if the sole or dominant purpose is for environmental protection activities. Therefore, the cost of removing asbestos and recladding walls would result in an instant deduction for the rental property owner.
Other costs that can be claimed while the remediation work is being carried out include:
Interest on loans
Council rates
Water rates
Land tax
Depreciation on other assets
The above costs usually cannot be claimed while the property is not earning income, however the ATO website states that these costs can be claimed if environment remediation work is being done.
If you have a rental property that contains asbestos, please contact our team to discuss whether your remediation work would be tax deductible.
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