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Subletting a rental property

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Newbie

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Can I rent a property with a house and flat, rent out the house and flat separately on the holiday market, and deduct the property rental, fit out costs and running expenses against the holiday rental income? 

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ATO Certified Response

Community Manager

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Hi @Muzjrobi,

 

Thanks for you patience while we checked that for you.

 

Generally, if you own or are renting residential property and you derive income from allowing others to stay in it, the receipts need to be declared as income and expenses of doing so can be deductible.  Reductions in the amount of deduction that you can claim arise where, in addition to an income producing purpose, there is another purpose, such as a private purpose. 

 

Reductions in deduction entitlement can occur where you live in part of the property for a period of time, where you do not hold part of the property genuinely available for rent for a period when not rented, and where you are holding part of all of the property for your potential private use, such as reserving it for your own use during certain times. 

 

Property rental and  running costs would generally be deductible to such an extent as described. The deductibility of ‘fit out costs’ would depend in part on the nature of the expenses, but generally items that would be depreciable, like small electrical appliances, rugs and curtains,  etc. could be deductible under depreciation rules.

 

Hope this helps! Thanks, NateH

2 REPLIES 2
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Community Manager

Replies 0

Hi @Muzjrobi,

 

Welcome to our Community!

 

We have escalated your question to a specialist area to get a response and we will get back to you soon.

 

Thanks,

 

NateH

Highlighted

Most helpful response

ATO Certified Response

Community Manager

Replies 0

Hi @Muzjrobi,

 

Thanks for you patience while we checked that for you.

 

Generally, if you own or are renting residential property and you derive income from allowing others to stay in it, the receipts need to be declared as income and expenses of doing so can be deductible.  Reductions in the amount of deduction that you can claim arise where, in addition to an income producing purpose, there is another purpose, such as a private purpose. 

 

Reductions in deduction entitlement can occur where you live in part of the property for a period of time, where you do not hold part of the property genuinely available for rent for a period when not rented, and where you are holding part of all of the property for your potential private use, such as reserving it for your own use during certain times. 

 

Property rental and  running costs would generally be deductible to such an extent as described. The deductibility of ‘fit out costs’ would depend in part on the nature of the expenses, but generally items that would be depreciable, like small electrical appliances, rugs and curtains,  etc. could be deductible under depreciation rules.

 

Hope this helps! Thanks, NateH