Renovating your property can be an exciting project, but without careful planning and tax strategy, you may miss out on deductions or draw unwanted attention from the ATO. Here are the most frequent renovation-related tax errors—and how to steer clear of them.
Avoid common mistakes and make sure you’re claiming every deduction.
1. Misclassifying Renovation Costs
One of the biggest mistakes property owners make is misclassifying renovation expenses. The ATO distinguishes between repairs, maintenance, and capital improvements:
- Repairs and maintenance can be claimed as deductions in the year they happen, such as fixing a leaky roof or repainting.
- Capital improvements, like adding a new kitchen or extending the property, are long-term investments and must be depreciated over time.
Tip: Always classify your renovation costs correctly to avoid the ATO questioning your deductions.
2. Failing to Keep Detailed Records
Without detailed records, it’s challenging to claim all eligible deductions or prove to the ATO that your renovation expenses are legitimate. Common mistakes include:
- Not keeping receipts, invoices, or detailed descriptions of work
- Not documenting the costs of each improvement
- Losing before-and-after photos of your property
To prevent issues, keep a thorough record of every expense and renovation detail.
3. Overlooking Depreciation Deductions
Property owners often miss out on depreciation claims for new assets such as appliances, flooring, and fixtures installed during renovations. These deductions can add up over time, but failing to track eligible assets can mean losing money.
Need Help Navigating Renovation Tax Claims?
4. Not Claiming the Full Depreciation Entitlement
Many property owners don’t maximize their depreciation because they don’t conduct a proper depreciation schedule. Hiring a qualified quantity surveyor to assess your property’s depreciation can help you find opportunities to claim on both structural and plant items.
5. Ignoring GST Implications
Another common error is forgetting about the GST implications of renovations. If your property is a commercial rental or you are registered for GST, you may be able to claim back GST on renovation costs.
Tip: If you’re registered for GST, make sure you understand how it affects your renovation claims.
6. Not Seeking Professional Help
Property renovation tax rules are complex, and the risk of missing deductions or making costly errors is high. Seeking professional help ensures you comply with ATO rules and maximize your tax return.
How Refund MyTax Now Can Help
At Refund MyTax Now, we specialize in helping property owners with:
- Correctly classifying renovation costs
- Maximizing depreciation and deductions
- Ensuring your renovation tax claims comply with ATO rules
- Preparing and accurately lodging your tax return
Let us help you get the most out of your property renovations this tax season.
Choosing Refund MyTax Now means you’re not just lodging a return; you’re optimising your financial position. With our expertise, you can confidently navigate your income tax return 2025 and unlock your largest possible tax refund. Get started today and experience the difference of a professional, efficient, and maximising tax service.
No matter where you are in Australia—working with Refund MyTax Now (A Certified Practising Accountant (CPA) or Registered Tax Agent) can help simplify your tax obligations and boost your financial outcomes. We encourage you to register online and connect with one of our expert accountants for a detailed, one-on-one discussion. Our priority is to ensure you claim every eligible deduction and receive the maximum refund possible.
If you’re looking to begin your Online Income Tax Return, or need information about the 2025 tax return, myTax 2025, or myGov 2025, feel free to reach out.
Let the professionals handle your income tax return 2025 with care and efficiency. Start your online tax return 2025 today with Refund MyTax Now—and get your refund faster.
