Complete this section for rental income earned and expenses incurred when you rent out your rental property located in Australia.
Rental deductions for vacant land
You can no longer claim tax deductions for the cost of holding vacant land. These changes apply to costs incurred from 1 July 2019, even if you held the land before that date.
If your rental property was destroyed by a natural disaster or circumstances beyond your control, you can still claim deductions for the cost of holding the land for three years from the time the property was destroyed. You may apply to the Commissioner for an extension to the three-year limit.
Tax and COVID-19
The way the rental income and expenses are divided between co-owners varies depending on whether the co-owners are joint tenants, tenants in common or there is a partnership carrying on a business of letting rental properties.
- Dividing income and expenses according to legal interest
- Co-owners of an investment property (not in business)
- Partners carrying on a business of letting rental properties
Renting out part or all of your home
If you rented out part, or all, of your home, the rent money you received is assessable income. This means:
- you must declare the rental income in your income tax return
- you can claim deductions for associated expenses, such as part or all of the interest on your home loan
- you may not be entitled to the full main residence exemption from capital gains tax (CGT) when you sell your home.
Renting out your holiday home
If you have a holiday home that you rent out, you must include the rent money you received in your assessable income. You can also claim deductions for the associated expenses. In deducting your expenses, you must ensure that you are apportioning expenses to account for any private use of the property. You can only claim expenses for periods that your holiday home was being rented or was genuinely available for rent.
Do not show at this section
Don't show the following at this section:
- a deduction for the decline in value of a low-value pool, go to Low-value pool deduction
- foreign source rental income, that is, rental income from properties outside Australia, go to Other foreign income
- expenses incurred in earning rental income from properties located outside Australia, go to Other foreign income
- income earned, or expenses incurred, from peer-to-peer sharing or your car, caravan or car parking space, go to Any other income.
The following video shows you how to include rental income and expenses in myTax.
Media: How to include rental income and expenses in myTax
https://tv.ato.gov.au/ato-tv/media?v=bd1bdiubtjsfhwExternal Link (Duration: 1:59)
The following video shows you how to use the Depreciation and capital allowances tool.
Media: How to use the Depreciation and capital allowance tool
https://tv.ato.gov.au/ato-tv/media?v=bd1bdiuboi7hkiExternal Link (Duration: 3:18)
You must have the right records for the claims that you make. You will need details of:
- all rental income earned
- interest charged on money you borrowed for the rental property
- other expenses relating to your rental property
- if applicable, the period your property was genuinely available for rent
- any expenditure on capital works to your rental property.
See simple steps when preparing your return for useful guidance on how to show your income and expenses.
To personalise your return to show Australian rental income and expenses, at Personalise return select:
- You had Australian interest, or other Australian income or losses from investments or property
- Rent (Australian properties)
To show your Australian rental income and expenses, at Prepare return select 'Add/Edit' at the Rent banner.
At the Rent banner:
Rental property details
We may pre-fill your tax return with some rental property details from your last year's tax return.
- For each rental property you own or have an interest in that:
- has pre-filled, check them and add rental property details not pre-filled into the corresponding fields.
- has not pre-filled, select Add and enter rental property details into the corresponding fields.
- Property name
In the Search address field, start entering an address and select your property address from the drop-down menu.
If your rental property address is not listed in the drop-down menu, select Use entered address and enter the full rental property address in the fields provided.
- Date property first genuinely available for rent
Enter the first date that the property was genuinely available for rent
- Number of weeks property was rented this year
Enter the number of weeks the property was rented out during the income year
- Ownership percentage
Enter the percentage amount of your ownership.
If you co-own the rental property, you need to be aware of the way that rental income and expenses are divided between co-owners. Visit Co-ownership of rental property to learn more.
- For each rental property, complete the rental income fields:
- Total rental income
Enter the total amount of rent payments received for the property
- Total other-rental related income
Enter the total of other rental-related income.
- Total rental income
If your ownership percentage is less than 100%, myTax will use your ownership percentage to calculate your share of the income amounts. You may alter your share of the amounts. If you do, keep a record of how you worked out your share.
MyTax will calculate Total gross rent. If your ownership percentage is less than 100%, myTax will also calculate Your share of gross rent.
- For each rental property, complete the rental expenses fields.
The Depreciation and capital allowances tool can help you work out any decline in value. It can also work out any deductible balancing adjustment when you stop holding a depreciating asset. Access this tool when you enter your rental income or expense details.
Fields from this tool can’t be adjusted in myTax. To make any adjustments or to add new assets to the tool, select the ‘Use the depreciation and capital allowances tool’ link.
If your ownership percentage is less than 100%, myTax will use your ownership percentage to calculate your share of the expense amounts. You may alter your share of the amounts. If you do, keep a record of how you worked out your share.
MyTax will calculate Total expenses. If your ownership percentage is less than 100%, myTax will also calculate Your share of total expenses.
MyTax will calculate Net rent based on the calculated amounts in Total gross rent and Total expenses. If your ownership percentage is less than 100%, myTax will also calculate Your share of net rent.
- Select Save.
- Select Save and continue when you have completed the Rent section.
Information to support you completing this question:
Rental income is the full amount of rent and rental associated payments you earn when you rent out your property (including renting out a room). If payment is made in goods or services, you will need to work out the monetary value of these. Your gross rental income amount includes:
- rental income – rent paid to you
- rental-related income – such as:
- any bond money you
- retained in place of rent, or
- kept because of damage to the property requiring repairs
- an insurance payout for lost rent, or a reimbursement of any rental expenses, you claimed in 2020–21 or in an earlier year
- fees retained from cancelled booking.
- any bond money you
You can claim most expenses relating to your rental property but only for the period your property was rented or genuinely available for rent, for example, advertised for rent without limiting its exposure to potential clients.
Expenses could include advertising for tenants, bank charges, body corporate fees, borrowing expenses, council rates, decline in value of depreciating assets, gardening and lawn mowing, insurance, land tax, pest control, property agent fees or commissions, repairs and maintenance, stationery, phone and water charges.
You can claim 100% of fees or commissions charged by a sharing economy facilitator or administrator.
- Renting out part or all of your home
- Holiday homes
- Deduction for prepaid expenses
- Always check your supplier's ABN
- Expenses prior to property genuinely available for rent
- Apportionment of rental expenses
- Co-owner rents property
- Guide to depreciating assets
Types of rental expenses
There are three categories of rental expenses:
- expenses you incur and can claim an immediate deduction for in the income year, such as interest on loans – see Rental expenses you can claim now
- expenses you can claim over several income years, such as depreciation – see Rental expenses you claim over several years
- expenses you can't claim, such as costs your tenant paid, deductions unrelated to your investment property and expenses related to holding vacant land – see Rental expenses you can't claim.
Rental property owners should remember three simple steps when preparing their return:
- Include all the income you receive
This includes income from short term rental arrangements (for example, a holiday home), sharing part of your home, and other rental-related income such as insurance payouts and rental bond money you retain.
- Get your expenses right
- Eligibility – Claim only for expenses incurred for the period your property was rented or when you were actively trying to rent the property on commercial terms.
- Timing – Some expenses must be claimed over a number of years.
- Apportionment – Apportion your claim where your property was rented out for part of the year or only part of your property was rented out, where you used the property yourself or rented it below market rates. You must also apportion in line with your ownership interest.
- Keep records to prove it
You should keep records of both income and expenses relating to your rental property, as well as purchase and sale records.
And remember, renting property (including all or part of your own home) will usually give rise to a capital gain or loss when you sell the property – which you will need to include in your return in that year. For more information, see Capital gains or losses.
See also:How to report rental income and expenses when you lodge your return using myTax.