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  • 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% + (½ × 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.

    Proposed legislative changes will disallow all travel deductions relating to inspecting, maintaining or collecting rent for a rental property. If passed, these changes may affect your 2017–18 income tax return.

      Last modified: 18 Aug 2017QC 16824