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Re: Deductions for rental property when the property is vacant

Newbie

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Replies 1

Tenants were vacated out of a rental property on the 31st of October 2019 with the intention of selling the property. On November 30 2019 the property was sold. Historically, the property was always rented out.


During the month of November, expenses such as general maintenance costs such as pool cleaning and tile cleaning were incurred to ensure the property is in the best state possible before the auction.

 

My question is are these expenses incurred during November deductible or not? or do they form part of the cost base instead.

 

I am only confused because my understanding is that expenses can only be deductible if the property was rented or there was an intention to rent it out. In this case, the intention was to sell the propery.

 

Can you please confirm if the pool cleaning and general repairs costs incurred during november are deductible or not

 

 

 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Former Community Support

Replies 0

Hi @ajurleta,

 

That’s a great question and thank you for reaching out to the community.

 

You can claim a deduction for your rental property related expenses for the period your property is rented or is genuinely available for rent. Rental expenses to claim describes this in detail and has a video to explain when you can claim a deduction for rental property expenses.

 

You may be able to claim a full deduction for the cost of repairs and maintenance in the year that you incur them if:

  • the expense directly relates to wear and tear or other damage that occurred as a result of renting out property, and the property
    • continues to be rented on an ongoing basis
    • remains available for rent but there is a short period when the property is unoccupied – for example, where unseasonable weather causes cancellations of bookings or advertising is unsuccessful in attracting tenants.

 

The following link Rental expenses you can claim now, provides further details on what you can and what you can’t claim as well as a useful table to determine the category of your rental property expense.

 

As discussed in Calculating the cost base for real estate, when working out the reduced cost base for real estate you do not include:

  • council rates
  • insurance
  • land tax
  • maintenance costs
  • interest on money you borrowed to buy or improve the property.

 

Please check out the Rental Properties 2020. It’s a really useful guide which provides relevant examples to assist you. As this subject matter can be complicated, you can also seek professional advice.

 

All the best,
Dejan

1 REPLY 1

Most helpful response

Former Community Support

Replies 0

Hi @ajurleta,

 

That’s a great question and thank you for reaching out to the community.

 

You can claim a deduction for your rental property related expenses for the period your property is rented or is genuinely available for rent. Rental expenses to claim describes this in detail and has a video to explain when you can claim a deduction for rental property expenses.

 

You may be able to claim a full deduction for the cost of repairs and maintenance in the year that you incur them if:

  • the expense directly relates to wear and tear or other damage that occurred as a result of renting out property, and the property
    • continues to be rented on an ongoing basis
    • remains available for rent but there is a short period when the property is unoccupied – for example, where unseasonable weather causes cancellations of bookings or advertising is unsuccessful in attracting tenants.

 

The following link Rental expenses you can claim now, provides further details on what you can and what you can’t claim as well as a useful table to determine the category of your rental property expense.

 

As discussed in Calculating the cost base for real estate, when working out the reduced cost base for real estate you do not include:

  • council rates
  • insurance
  • land tax
  • maintenance costs
  • interest on money you borrowed to buy or improve the property.

 

Please check out the Rental Properties 2020. It’s a really useful guide which provides relevant examples to assist you. As this subject matter can be complicated, you can also seek professional advice.

 

All the best,
Dejan