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Expenses prior to property being genuinely available for rent - electricity

Newbie

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Replies 3

Hi,

 

I note that the tax guides say "Expenses prior to property being genuinely available for rent - You can claim expenditure such as interest on loans, local council water and sewerage rates, land taxes and emergency services levies you incurred during renovations to a property you intend to rent out. However, you cannot claim deductions from the time your intention changes, for example, if you decide to use the property for private purposes."

 

Is this "such as" all inclusive? I renovated my unit prior to putting it on the rental market and needed to have electricity in the unit. Can I claim the electricity as an expense? My intention was always to have this as an investment property.

 

Thanks

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Former Community Support

Replies 2

Hi @kazewisc,

 

I would say no - this is because the ATO usually only allows being able to claim rental expenses for rental properties available for rent or currently rented. There are some exceptions as listed in the 'Rental properties 2020' on Pg 9 under 'Expenses prior to property being genuinely available for rent'. There are some expenses listed here allowed during renovations on a property that a person would intend to rent out eg interest on loans, council rates  Unfortunately, I could find no mention of utilities or electricity expenses being allowed under this category on our website, or our tax legislation.

 

You can consider whether these expenses come under 'Repairs and maintenance' as a capital expense (and therefore may increase your CGT cost base, when you sell the property) under this section again in the 'Rental property guide'.

 

3 REPLIES 3

Most helpful response

Former Community Support

Replies 2

Hi @kazewisc,

 

I would say no - this is because the ATO usually only allows being able to claim rental expenses for rental properties available for rent or currently rented. There are some exceptions as listed in the 'Rental properties 2020' on Pg 9 under 'Expenses prior to property being genuinely available for rent'. There are some expenses listed here allowed during renovations on a property that a person would intend to rent out eg interest on loans, council rates  Unfortunately, I could find no mention of utilities or electricity expenses being allowed under this category on our website, or our tax legislation.

 

You can consider whether these expenses come under 'Repairs and maintenance' as a capital expense (and therefore may increase your CGT cost base, when you sell the property) under this section again in the 'Rental property guide'.

 

Newbie

Replies 1

I see, thanks @WainWright. So that's an exhaustive list. So "body corporate fees" would also not be claimable during the time it was renovated, before it was advertised?

ATO Community Support

Replies 0

Hiya @kazeisc,

 

The information available on our website states exactly this:

 

Expenses prior to property being genuinely available for rent

You can claim expenditure such as interest on loans, local council water and sewerage rates, land taxes and emergency services levies you incurred during renovations to a property you intend to rent out. However, you cannot claim deductions from the time your intention changes, for example, if you decide to use the property for private purposes.

 

If you need further clarification, I would recommend getting in touch with our early engagement area, for more specific advice.

 

Early engagement.