What are Capital Works Deductions?
The term capital works deductions can sound confusing, but they are actually fairly straightforward. Capital works deductions refer to the costs incurred by a property investor for improvements and repairs made to their property. These expenses are claimed as tax deductions, which reduces the amount of taxable income an investor receives from their investment.
Investors need to be careful not to overstate any claims for capital work deductions or else risk incurring penalties such as being audited by the ATO (Australian Taxation Office).