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
- 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
- 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.
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.