Cutting Down A Tree? There's A Tax Deduction For That!

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As a new investment property owner, you have entered the world where you will be spending some of your summer free time attending to chores at a property other than the one you live in. You know you must attend to annual tree maintenance before the predictable summer storms hit, but did you know you can actually financially benefit from this chore? Unlike tree maintenance done at the home you live in, tree maintenance done at a rental property can be tax deductible, and these are the main facts you need to know.

Why Is Tree Removal Deductible?

When you need to trim a tree because some of the branches are too long, that is counted as an improvement, so it is not tax deductible. However, when you need to completely remove the tree because it is causing issues, then this is counted as repairs and maintenance, which makes it a tax deductible chore.

What Issues Make Tree Removal Deductible?

In a nutshell, you can't just remove the tree for no reason and claim it as a tax deduction; the reason for the removal is key to whether it falls under the Australian Taxation Office guidelines:

• If the tree is healthy, but your tenant is constantly complaining about leaves in the gutter, the tree removal is not tax deductible because it is not currently doing any damage to the property.
• If the tree is diseased and it has the potential to fall on the investment property, then the removal is tax deductible. However, bear in mind this disease needs to be new and can only have occurred since you took ownership of the property. Old disease that existed in the tree when you bought the property is not deductible as it began in a time you did not own the tree.
• If the tree itself is causing damage to the property, for example roots are interfering with the plumbing, the removal of the tree is tax deductible. However, again this damage cannot have been apparent to you when you bought the investment dwelling.

Who Pulls Down The Tree?

The other thing you need to know about claiming a tax deduction for a tree removal is you cannot perform the work yourself. Because the ATO does not allow personal labour to be claimed, you will need a reputable tree service firm to remove the offending tree for you. However, the good news about this is that this is one less chore for you to do on your weekend chore list.

Now you know about when tree removal can work out in your favour at tax time, get those diseased trees removed before summer storm season rolls in. Don't forget to save your receipts for when it's time to file your tax return though.

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14 October 2015