To make sure that they are properly prepared for their tax returns in the lead up to the end of the financial year, the ATO have recently released a publication for rental property owners called Rental properties – claiming travel expense deductions.
In this report, rental property owners can find information on what they can and cannot claim in relation to travel for their properties, how to work out their expenses to make the most out of their claim, and what records they need to keep for taxation purposes.
According to this publication, travel expenses relating to a rental property that can be claimed in the property owner’s tax return are those incurred while inspecting or maintaining the property, or while collecting rent paid for the property. The cost of traveling to and from a rental property for the purpose of collecting rent from tenants is also able to be claimed on tax, as is the expense of visiting an agent to discuss a rental property.
There are rules covering what constitutes a legitimate claim, however, and these must be followed in order to make the most of a claim, and to avoid legal complications at a later date.
For example, although travel expenses incurred while performing maintenance or repairs on a rental property can be claimed when the property is in use or between tenant occupation, any costs for travel undertaken before the owner takes on their first tenant, or when the property is not genuinely available for rent, are not able to be claimed.
In addition, the report explains how to calculate expenses for car travel, long distance travel and even overseas travel, including costs for accommodation and meals relating to extended trips. It is best to be very careful when claiming expenses for extended trips, especially those taken overseas.
While Australian residents who own properties overseas can claim the cost of international travel and some expenses incurred while overseas, the taxation office requires the proper documentation to prove that only expenses relating to rental property inspection and upkeep, and rent collection are being claimed, and not those relating to the property owner’s holiday.
It is important to keep proper records for any expenses being claimed, and Oculus taxation professionals, are the best people to speak to if in doubt about what can and cannot be claimed as travel expenses for rental properties, how to calculate these expenses properly, and what records the tax office will require to substantiate these claims.