Rental property: is it a repair or an improvement?
Updated 2026-10-15 · Australia
A repair fixes damage or wear and tear to bring something back to how it was — generally deductible in the year you pay for it. An improvement makes it better than it was, or replaces an entire asset, and is generally claimed over several years as capital works or decline in value. Repairs to defects that existed when you bought the property ('initial repairs') aren't immediately deductible.
Examples
| Usually a repair | Usually an improvement |
|---|---|
| Replacing a few broken roof tiles | Replacing the whole roof |
| Patching and repainting a damaged wall | Renovating the kitchen |
| Fixing a leaking tap | Adding a new bathroom |
| Replacing part of a damaged fence | Building a new fence or deck |
Keep the evidence
Keep invoices that describe the work, before-and-after photos, and the date. Tag your property account in Sorted Budget and repairs appear under the property's financial-year totals.
Frequently asked questions
Is replacing a hot water system a repair?
Replacing an entire appliance is usually treated as buying a new depreciating asset, not a repair. Check the ATO guidance or a tax agent.
Are repairs right after purchase deductible?
Repairs to damage that existed when you bought the property are generally capital, not immediately deductible.
Sources
Last checked 2026-10-15.