Question

under australian tax law, if I rent out an apartment and i pay $1000 for a property management agent, is this cost tax deductible, if yes, what law does it fall under?

Answer 1

You can claim a deduction for your rental property related expenses for the period your property is rented or is genuinely available for rent.

If you use your property for both private and income-producing purposes, you can only claim a deduction for the portion of any expenses that relate to the income-producing use.

General

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Property

• Rental property expenses to claim

  You can claim a deduction for your rental property related expenses for the period your property is rented or is genuinely available for rent.

  If you use your property for both private and income-producing purposes, you can only claim a deduction for the portion of any expenses that relate to the income-producing use.

  Types of rental expenses

  There are three main types of rental property expenses:

  • Rental expenses you can claim now – you can claim these in the same income year, such as interest on loans, council rates, repairs and maintenance.
  • Rental expenses you claim over several years – you can claim these expenses over a number of income years, such as depreciation.
  • Rental expenses you can’t claim – such as costs your tenant paid, deductions unrelated to your investment property and the cost of travel you incur relating to your residential rental property.

  Property rented or genuinely available for rent

  You can claim a deduction for rental expenses you incur, if you use your property for income-producing purposes.

  You can only claim a portion of your expenses if any of the following apply to you:

  • Your property is only genuinely available for rent for part of the year.
  • Your property is used for private purposes for part of the year.
  • Only part of your property is used to earn rent.
  • You rent your property at non-commercial rates.
  • Your investment loan is partially used for private purposes.

  When you can claim

  You can claim expenses for periods when your property is either:

  • rented out
  • not rented out but is genuinely available for rent, which means
    • the property is advertised, giving it broad exposure to potential tenants
    • considering all the circumstances, tenants are reasonably likely to rent the property.

  If these don't apply, it's likely that you can't claim all your expenses as you don't have a genuine intention to earn income from your property.