• 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