From 1 July 2017, travel expenses relating to a residential rental property are generally not deductible.
You can only claim a deduction for travel expenses you incur relating to your rental property from 1 July 2017 if:
- you are an excluded entity, or
- you are using the property in carrying on a business (including a rental property business), or
- the property is not a residential rental property.
Travel expenses include the costs of travel to inspect, maintain or collect rent for the property.
You are entitled to claim a deduction for a travel expense relating to your rental property incurred from 1 July 2017 as follows:
- You are allowed a full deduction where the sole purpose of the trip relates to the rental property. However, in other circumstances you may not be able to claim a deduction or you may be entitled to only a partial deduction.
- If you fly to inspect your rental property, stay overnight, and return home on the following day, all of the airfare and accommodation expenses would generally be allowed as a deduction provided the sole purpose of your trip was to inspect your rental property.
For the appropriate rates, see Work-related car expenses.
Apportionment of travel expenses
Where travel related to your commercial rental property or to your residential rental property used in carrying on a business is combined with a holiday or other private activities, you may need to apportion the expenses.
If you travel to inspect the property and combine this with a holiday, you need to take into account the reasons for your trip. If the main purpose of your trip is to have a holiday and the inspection of the property is incidental to that main purpose, you cannot claim a deduction for the cost of the travel. However, you may be able to claim local expenses directly related to the property inspection and a proportion of accommodation expenses.
You may also need to apportion your travel expenses if they relate to your commercial rental property or residential rental property used in carrying on a business, and residential rental property not used in carrying on a business. For more information, see Draft Law Companion Ruling LCR 2018/D2 – Residential premises deductions: travel expenditure relating to rental investment properties.