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  • Rental deductions tips

    The most common reason for amendments to tax returns relate to incorrect rental property expense claims.

    If your client updated their mortgage, ask them if the loan also covers personal items such as a car, boat or a holiday. If so, apportion their interest expenses accordingly.

    It's important that your clients are keeping track of their income and expenses and can provide proof if we ask for it. Follow these rental deductions tips:

    • Apportion deductions according to the share of ownership.
    • Your clients can only claim expenses for a rental property that are incurred in producing rental income.
      • Check if there are any periods when the property wasn’t being used to produce income.
      • Ensure deductions for the property expenses are reduced for periods your clients
        • use or reserve the property
        • allows friends or family to rent it at mates rates
        • have unreasonable conditions on the property.
    • Record deductions for each rental property separately.
    • Check if repairs or maintenance should be capital works that need to be claimed over a period of time.
    • Set up a depreciating asset schedule to keep track of certain items.

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    Last modified: 20 Jul 2022QC 70094