Structural improvements and building alterations are capital works carried out after the original building was constructed. These are typically renovations, upgrades, or construction projects that improve or modify the building structure.
Like the original building, these costs generally depreciate at 2.5% per year for 40 years using the Prime Cost method.
In TaxTank, these costs are grouped into Capital Works Groups, allowing you to record multiple expenses for the same renovation or project.
When to Use Structural Improvements
Use this category when recording capital building work completed after purchase, such as:
Kitchen renovations
Bathroom renovations
Replacing or upgrading windows (e.g. double glazing)
Building a deck, pergola, or extension
Structural wall changes
Major building upgrades or improvements
You can also use this category for initial repairs that are considered capital costs when you purchase a property, such as replacing a damaged kitchen or renovating a bathroom that existed when the property was acquired.
How to Add Structural Improvements
Step 1 – Add Depreciation
Go to the Depreciation tab under the relevant property.
Click Add.
Step 2 – Select Building & Improvements
From the switcher, select Building & Improvements.
Step 3 – Select the Category
From the Category dropdown, choose:
Structural Improvements, or
Building Alterations
💡 Tip: Structural Improvements vs Building Alterations, what should I choose?
Structural Improvements usually involve adding or upgrading major parts of the building, such as a new kitchen, bathroom renovation, extension, or installing double-glazed windows.
Building Alterations typically involve modifying or changing existing structures, such as removing walls, reconfiguring layouts, or altering existing building components.
Step 4 – Create or Select a Capital Works Group
Structural improvements are recorded within a Capital Works Group so that related expenses can be grouped together.
Examples:
Kitchen Renovation
Bathroom Upgrade
Window Replacement Project
To create a group:
Click Add/Edit Groups
Enter a Group Name
Enter the Effective Date (the date the project was completed)
Click Add
This date becomes the start date for depreciation for that project.
Step 5 – Enter the Improvement Cost
Complete the remaining fields:
Amount: Enter the cost of the improvement.
Description: Add a short description (e.g. Kitchen renovation, Double glazing installation).
Capital Works Group: Select the relevant renovation or project group.
Once saved, depreciation will automatically apply year after year.
Structural Improvements vs Repairs
It’s important to distinguish between repairs and capital improvements.
Repairs
Restore something to its original condition
Usually deductible immediately
Example: fixing a leaking tap or repairing a broken tile
Structural Improvements / Alterations
Improve, replace, or substantially upgrade part of the building
Must be depreciated over time as capital works
Example: replacing all windows with double glazing or installing a new kitchen
If work improves or replaces a major part of the building, it will generally be treated as a capital improvement rather than a repair.
Example
An investor purchases a rental property and completes several improvements two years after settlement:
New kitchen installed: $18,000 (completed 10 Feb 2026)
Double glazing installed: $12,000 (completed 17 Mar 2026)
Both items are structural improvements and should be recorded as separate Capital Works Groups in TaxTank.
Project 1 – Kitchen Renovation
Group Name: Kitchen Renovation
Effective Date: 10 Feb 2026 (project completion date)
Project 2 – Window Upgrade
Group Name: Double Glazing Installation
Effective Date: 17 Mar 2026 (project completion date)
Each project can then contain multiple related expenses (materials, labour, installation etc).
TaxTank will automatically apply 2.5% depreciation per year from the completion date, and track the remaining balance for future tax deductions and CGT capital works adjustments.
💡 Tip: Creating separate Capital Works Groups for each renovation project makes it easier to track improvements over time and ensures the correct capital works adjustments are applied if the property is sold.