Rental Property and Travel Expenses

Tax and Benefits, Tax This Year / By

Many rental deduction claims are based on direct expenses incurred, such as rates, insurance and interest. Travel expenses are often more difficult to substantiate – they need to be valid and incurred with the main purpose of maintaining your property, or in relation to earning rental income, to be deductible.

Travel expenses you can’t claim:

  1. Travel to view a property prior to purchase, and travel prior to renting to your first tenant;
  2. If you need to undertake repairs prior to renting the property, this travel is not deductible (but can form part of the capital cost base of the property);
  3. Travel that has an essentially private character (where seeing the property was incidental to your main purpose), or where the property is not genuinely rented (such as where it is rented to family members for a nominal or nil amount).

Travel expenses you can claim:

  1. Travel to collect the rent, if you have multiple properties.
  2. Travel to undertake repairs, where the damage was incurred during the period you were renting the property. This includes cleaning, garden maintenance, pest control and larger maintenance projects;
  3. Travel to inspect the property, either during a tenancy or at the end of a tenancy;
  4. Travel to visit your agent or other professionals or trades people you have engaged to undertake repair work on the property.

Claiming Travel expenses successfully requires:

  1. Document the travel –
    a. dates the travel was undertaken;
    b. the purpose of the journey;
    c. whether the travel is 100% property related or should be apportioned between property and private expense;
    d. the tasks you undertook while at the property;
    e. keep a record of the kilometeres travelled or receipts regarding airfares or other costs incurred;
    f. encourage tenants to put requests for repairs in writing.
  2. Plan your visits –
    a. contact your agent to make a time to view the property – ensure sufficient time for the tenant to be contacted ;
    b. email tradespeople and others, confirming work to be undertaken and other instructions, so you have a document trail to verify the purpose of the trip;