Rental property expenses

What you can claim

You can claim expenses relating to your rental property but only for the period your property was rented or available for rent; for example, advertised for rent.

Expenses could include:

  • advertising for tenants
  • bank charges
  • body corporate fees and charges
  • borrowing expenses
  • capital works
  • cleaning
  • council rates
  • decline in value of depreciating assets
  • gardening and lawn mowing
  • insurance - building, contents and public liability
  • interest expenses
  • land tax
  • legal expenses (excluding acquisition costs and borrowing costs)
  • pest control
  • phone
  • property agent fees and commissions
  • repairs and maintenance
  • stationery and postage
  • travel undertaken to inspect or maintain the property or to collect the rent
  • water charges.

If part of your property is used to earn rent, you can claim expenses relating to only that part of the property. You will need to work out a reasonable basis to apportion the claim. As a general guide, apportionment should be made on a floor-area basis, that is, by reference to the floor area of that part of the residence solely occupied by the tenant, together with a reasonable figure for tenant access to the general living areas, including garage and outdoor areas if applicable.

Example

Gerard’s private residence includes a second storey which he rented out. The second storey represents 30% of the total floor area of the house. Gerard also shared the laundry with his tenant. The laundry takes up 10% of the total floor area of the house. If half is a reasonable figure for use of the laundry by the tenant, Gerard can claim 35% of the expenses for the property – that is:

30% + (1/2 x 10%) = 35%.

End of example

Taxation Ruling IT 2167 – Income tax: rental properties – non-economic rental, holiday home, share of residence, etc. cases, family trust cases will give you more details about apportionment.

    Last modified: 22 Jun 2016QC 16824