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Expenses you can no longer claim from your rental property

Expenses you can no longer claim from your rental property

If you own a rental property, the income and expenses relating to that property are recorded in your income tax return. Like with other deductions, you can claim a wide variety of expenses which relate to the rental property and reduce the amount of taxable income sourced from the property.

However, recent changes mean some expenses can no longer be claimed which had been available in prior years:

1. Second Hand Assets

In prior years, you were able to claim depreciation on assets which were second hand and related to the rental property.

However, these assets are no longer claimable for assets acquired after 9 May 2017, or for assets acquired before 1 July 2017 but not claimed in the 2016/17 tax return.

2. Travel Expenses

In prior years, you were able to claim expenses related to travelling to/from a rental property for the purpose of inspection, maintenance, or collection of rent.

However, from 1 July 2017 you are no longer able to claim travel expenses which relate to a residential business property. You also are unable to claim these expenses in the cost base of the property.

If your investments count as carrying on a business of producing rental property income, these changes don’t apply. The prior rules regarding these deductions remain in effect.

However, to be “carrying on a business” there are several hoops to jump through including the scale of income received, the number of properties owned and the character of involvement.

Chances are, if you have one or two properties, you are not carrying on a business and as such the deductions for second hand assets and travel expenses can not be claimed in the 2018 tax return and future returns.


This information is not to be relied upon without speaking to your accountant, tax agent or financial adviser depending on the advice

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