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  • Residential rental properties

    If you invest in a rental property or rent out your current property, you'll need to keep records right from the start, work out what expenses you can claim as deductions, and declare all your rental-related income in your tax return.

    Any capital gain you make when selling or otherwise disposing of the property will be subject to capital gains tax (CGT) except in some circumstances where you rent out the home you've been living in.

    If you have an investment property that is not rented or available for rent – such as a holiday home, hobby farm, or another dwelling you choose not to rent:

    • the property is subject to CGT in the same way as a rental property
    • you generally can't claim income tax deductions for the costs of owning the property because it doesn't generate rental income
    • you may be able to include your costs of ownership in the property's cost base, which would reduce any capital gains tax liability when you sell it.

    To download a PDF guide on how to treat rental income and expenses – see Rental properties 2019

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    Prepare your tax return – rental properties

    Rental property owners should remember these key points when preparing their income tax return:

    • include all income you receive from
      • short term rental arrangements (for example, a holiday home)
      • sharing a part of your home
      • other rental-related income such as insurance payouts and rental bond
       
    • get your expenses right
      • claim only for expenses incurred for the period your property was rented out or you were actively trying to rent the property on commercial terms
      • some expenses must be claimed over a number of years
       
    • apportion your claim in line with your ownership interest and where
      • the property is only rented for part of the year
      • only part of the property is rented
      • the property is rented to yourself
      • the property is rented below market rates
       
    • keep records – you should keep records of both income and expenses relating to your rental property, as well as purchase and sale records.
    Last modified: 17 Jun 2019QC 23626