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Rental Properties - Allowable Deductions & Changes

Written by Sonia Spaseski . November 12, 2018
2 min read

Rental properties can generally serve as a good long-term investment for your future, as long as it’s a good property in a good location. While they can be expensive to maintain, especially if there are periods without tenants, the tax deductions from a rental property can be beneficial to your tax return.

What can you claim?

When preparing a tax return for your rental property, there are a number of expenses that you can claim against the income generated by the property, which include:

  • Advertising for tenants
  • Bank charges
  • Body corporate fees and charges
  • Cleaning
  • Council rates
  • Electricity and gas
  • Gardening and lawn mowing
  • Insurance (including building, contents and public liability)
  • Interest on loans
  • Land tax
  • Lease document expenses
  • Legal expenses (excluding acquisition and borrowing costs)
  • Pest control
  • Property agents fees and commissions
  • Quantity surveyor’s fees
  • Repairs and maintenance
  • Security patrol fees
  • Stationery and postage
  • Water charges

You can also claim expenditure such as interest on loans, council rates, water rates on land that you have purchased that you intend to build a rental property on (within reasonable time limits) or expenses incurred during renovations to a property that you intend to rent out.

From 1 July 2017, The Federal Government’s changes to the deductibility of some expenses took effect. The changes limit allowable asset depreciation and travel deductions in regard to residential properties.

Changes in Travel Expenses

Expenses previously allowed in regards to inspecting, maintaining or collecting rent for a residential property will no longer be claimable from the 2017/2018 income tax year.

However, if you are using the property to carry on a business or you have a rental property business, then you can continue to deduct travel expenses relating to a residential rental property.

Changes in Depreciation Deductions for Second-Hand Assets

You will be unable to claim the decline in value of certain second-hand depreciating assets in your residential rental property. This change applies to the depreciating assets that you entered into a contract to acquire from 7:30pm on 9 May 2017 or used for any private purpose in 2016-2017 or earlier, for which you were not entitled to a deduction in value in 2016-17.

This change means that depreciation is not allowed on such assets as floor coverings, air-conditioning and appliances that were within the property at the time of purchase.  This does not affect deductions for structural or fixed items in the rental property, which are still allowed. However it is important to obtain a quantity surveyor report on the purchase of a rental property to determine the allowable deductions.

It is always important to review your property and investment deductions and ensure you are prepared for any future changes. BLG Business Advisers have a team to assist you through your individual situation. Take this opportunity to get in touch with us online or by calling (02) 4229 2211 today.

*This information is relevant at the time of publishing and is subject to change*
Written by Sonia Spaseski . November 12, 2018


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