Question 1

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 labour. Derek spent $300 on the electrical cable to fix the faulty wiring.