Edited version of private advice

Authorisation Number: 1052080576161

This private ruling was revised following issue. This edited version has therefore been replaced with the edited version of the private ruling with the authorisation number of 1052082968269.

Date of advice: 25 January 2023

Ruling

Subject: Rental property expenses

Question

Will the holding expenses of your rental property such as interest, rates and taxes, be tax deductible during a period where the property is vacant and repairs are required before the property is again habitable?

Answer

Yes.

Based on the information provided to the Commissioner, the expenses relating to your rental property are deductable under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) while the property is vacant and being repair.

This ruling applies for the following period:

Year ended 30 June 2022

The scheme commences on:

1 July 2021

Relevant facts and circumstances

You and your spouse own a rental property.

The property has been rented out since it was purchased.

The tenant moved out of the apartment in XXXX 2021.

The property has been vacant since the tenant moved out.

The property had become unfit for habitation due to water ingress and mould.

The owners corporation are taking action to force the builder to make good on the building defects causing the water ingress.

You and your spouse intend to put the property back on the rental market once it has been made habitable.

You and your spouse are incurring expenses such as loan interest, rates and taxes.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 8-1