Residential Rental Property Travel Expenses

Written by: The Institute of Certified Bookkeepers 

Travel expenses relating to a residential investment property are not deductible.

A residential premise (property) is land or a building that is:

  • occupied as a residence or for residential accommodation
  • intended to be occupied, and is capable of being occupied, as a residence or for residential accommodation.

Under the new legislation, your clients are no longer able to claim any deductions for the cost of travel they incur relating to their residential rental property unless they are carrying on a business of letting rental properties or are an excluded entity.

As with prior years, the travel expenditure cannot be included in the cost base for calculating your client’s capital gain or capital loss when they sell the property.

In the business of letting rental properties

Generally, owning one or several rental properties will not be considered being in the business of letting rental properties.

The receipt of income by an individual from the letting of property to a tenant, or multiple tenants, will not typically amount to the carrying on of a business of letting rental properties. This means that as their activities are generally considered a form of investment rather than a business, deductions for travel expenses are not allowed.

Excluded entities

An excluded entity is a:

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

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