Can I claim demolition costs on an investment property?
Quick Answer
Demolition costs may have different tax treatment depending on why the demolition occurred and what is being built or removed. They may relate to capital works, scrapping, asset disposal or the cost of new construction, so accountant advice is important.
Demolition can be complex.
It may involve:
Removing old assets
Demolishing part of a building
Preparing for renovations
Replacing damaged areas
Removing commercial fit-out
Tenant make-good works
Full redevelopment
New construction
Potential tax issues:
Scrapping old assets
Capital works write-off
Demolition as part of new capital works
Cost base implications
Repair versus improvement
Private versus rental use
Commercial versus residential treatment
The best approach is to get advice before demolition.
Koste.ai can help investors record what is being removed and request a pre-demolition review.