Derek Duffield, a self-employed electrician, purchased a house in Brisbane as an investment for $560,000 on 1 October 2018. He rented out the house from that date to the existing tenant for $610 per week. Derek seeks your advice as to whether he might be able to claim any tax deductions for the following expenses:

Derek took out a loan of $480,000 on 1 October 2018 for 25 years to purchase the house. Interest paid on the loan for the tax year ended 30 June 2019 was $35,000. The legal fees, loan charges and stamp duty paid in relation to the loan were $6,800.

On 15 April 2019 Derek paid $2,300 to replace the oven in the kitchen, which was badly damaged by a fire caused by an electrical fault. The new oven was similar to the original oven apart from being the latest model. He was able to re-use the original cooktop that was not damaged in the fire.

In regards to the electrical fault above, Derek repaired and rewired the kitchen wiring. He estimates that if he performed that work for a paying customer he would have charged $980 for his labor. Derek spent $300 on the electrical cable to fix the faulty wiring.

Answer rating: 100% (QA)

Derek can claim a deduction for the interest paid on the loan the legal fees loan charges ... View the full answer