Residential rental properties – travel expenses

Recent legislation has changed the deductibility of travel expenses for residential rental properties.

2017 Income Tax Return

Generally, you can claim a deduction for the cost of travel you incur to inspect or maintain rental properties or to collect rent.

You can claim travel expenses for:

• preparing the property for new tenants (except for the first tenants)
• inspecting the property during or at the end of tenancy
• undertaking repairs, where those repairs are because of damage or wear and tear incurred while you rented out the property
• maintaining the property, such as cleaning and gardening, while it is rented or available for rent
• collecting the rent
• visiting your agent to discuss your rental property.

2018 Income Tax Return (and future years)

In the 2017–18 Budget, the Government announced that it intended to deny all travel deductions relating to inspecting, maintaining, or collecting rent for a residential investment property from 1 July 2017.

It is intended that travel expenditure incurred in gaining or producing assessable income from residential premises used as residential accommodation will not be deductible. The expenditure will also not be recognised in the cost base of the property for CGT purposes.

You will be able to continue to deduct travel expenditure if:

• the losses or outgoings are necessarily incurred in carrying on a business for the purposes of gaining or producing assessable income; or
• you are an excluded class of entity.

An excluded class of entity will be:

• a corporate tax entity;
• a superannuation plan that is not a self-managed superannuation fund;
• a public unit trust;
• a managed investment trust; or
• a unit trust or a partnership, all of the members of which are entities of a type listed above.

Other Information

For further information on what deductions can be claimed for rental properties, please download Griffin & Associates rental property checklist

Sources:

Australian Taxation Office – Rental property deductions

Australian Taxation Office – Change in residential rental property deductions