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.

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Last modified: 29 Jan 2016QC 23626