What is considered a repair?
It is vital your property is well maintained; as well as keeping your tenants happy, staying on top of maintenance reduces the risk of small issues turning into larger, more costly problems down the road, which can affect the overall value of the property.
However, there is a difference between a repair and an improvement.
It is crucial to understand the difference between repairs and improvements, as these can have different tax implications and can also affect the overall value of the property.
Repairs
Repairs are generally defined as any work that is necessary to keep the property in good working order, or repair any damages that have occurred due to normal wear and tear. For example, fixing a leaky roof, repairing a broken window, or replacing a malfunctioning appliance are considered a repair.
In general, repairs are considered to be a necessary part of maintaining a property and the full cost of the repair can typically be a tax-deductible expense in the year the repair is made.
Improvements
Any work that increases the value of the property or extends its useful life is considered an improvement. For example, replacing existing appliances with more energy-efficient ones, renovating a kitchen, or installing new flooring as classed as improvements. While improvements can also be a tax-deductible expense, it is usually in the form of the depreciation value – this is calculated and claimed for over a number of years, rather than being deducted as a single cost in the year the improvement is made.
The line between repairs and improvements can sometimes be blurred, so we always advise consulting a tax professional or accountant to ensure your expenses are correctly categorised on your tax return.
Who is responsible for rental property repairs?
Landlords must ensure their property complies with building, health and safety laws, so you are responsible arranging and paying for most routine and urgent repairs, and reasonable wear and tear issues.
However, if a tenant or a tenant’s guest engages in negligent or intentional behaviour that leads to damage, they are responsible for paying for repairs.
When should repairs be completed?
Repairs are categorised as urgent or routine.
- Urgent repairs
These require immediate attention, particularly if they make the property unsafe. Depending on the severity and risk. the landlord (or property manager) must act either immediately, or within 3-7 days. Examples of urgent repairs include gas leaks, electrical issues, blocked toilets.
- Routine repairs/ maintenance
While not considered critical, these must still be attended to within 30 days. Remember, it’s better to make these routine repairs sooner rather than later to avoid the damage worsening.
If you don’t action a repair within an acceptable time frame, your tenants may seek compensation for your neglect.
For more information about repairs visit the NSW Government website here.
Managing repairs and maintenance is just one of the many advantages of having a property manager. We obtain quotes from qualified tradesmen, arrange and manage the work to be carried out and pay invoices from the rental income. In doing so, you can get on with other things, and it makes it easier for you to keep track of outgoings.
We also arrange and manage other essential maintenance such as gutter cleaning, as well as ensuring appliances, such as smoke alarms are tested and serviced regularly.
Want to know more about what we do, and how we can make your life easier, and also why our vacancy rates are lower than the national average?
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With nearly 50 years of business behind us, we are one of Newcastle’s longest established property management offices and we know property.
Give us a call on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or pop into our Cardiff office for a chat.
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