Travel expenses to Rental Properties
The only things in this world that are said to be certain (so the saying goes) are death and taxes. Perhaps a slightly pessimistic view of the world, but fairly accurate nonetheless!
Last year saw a change in tax legislation and this impacted on an Investor’s ability to claim travel expenses relating to the inspecting, maintaining or collection of rent for a residential rental property. As of 1 July 2017, this type of claim will no longer be permitted.
The exception to this is if you are carrying on a property investment business or if you are an “excluded entity”.
The Australian Taxation Office (ATO) defines an Excluded Entity as:
- A corporate tax entity
- A superannuation plan that is not a self-managed superannuation plan
- 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.
The changes to taxation are not retrospective and any travel claims incurred for periods prior to 1 July 2017 may still be able to be made.
The ATO website describes allowable travel expenses for periods prior to 1 July 2017 as:
- Preparing a property for rent for new tenants (not for the first tenants)
- Inspecting the property during or at the end of a Tenancy
- Undertaking repairs where those repairs are as a result of wear and tear when renting out the property
- Maintaining the property while it is rented or genuinely available for rent (cleaning, gardening, etc.)
- Visiting your Agent regarding the property
- Collecting rent if self-managed
Travel expenses for repairs and maintenance carried out on investment properties are not claimable before 1 July 2017 if the property was not genuinely available for rent at the time the repairs or maintenance was undertaken.
These travel claims are only applicable to those who have an ownership interest in the property.
Under no circumstances is the information included in this newsletter meant to provide legal or taxation advice and you are urged to seek your own professional advice from a taxation accountant or from the ATO.
Further information can also be found on the Australian Tax Office website: www.ato.gov.au
It’s also recommended to refer to your Accountant for advice related to your circumstances.
