Barbara purchased a residential property on 1 July 2020, which she determined was in good condition at the time of inspection. However, soon after the settlement date, Barbara discovered that the woodwork was severely damaged as the result of a termite infestation. Barbara is in a state of disbelief, given the pre-purchase building inspection report stated that the property was free from termites. Barbara realises that she must incur $50,000 to rectify the damage caused by the termites before the property can be rented. The repair work is undertaken, and the property is restored to a state in which it is suitable for occupation by tenants. Barbara writes to the former owner and notes that she would have paid a lower purchase price if she had known of the termites and the need for repairs. All the repairs were undertaken during the 2020-21 income year. The property was first rented to tenants on 1 June 2021. Which of the following statements is most correct in respect to Barbaras ability to claim a deduction for the repair costs? Question 5 options:

1) A deduction is available as the repairs were only performed on part of the residential property.

2) The repair costs are deductible as Barbara would have paid a lower purchase price if he had known of the need for repairs.

3) The repairs are capital in nature, and non-deductible.

4) The repairs are not initial repairs as Barbara did not know about them at the time of acquisition and so they are deductible.