Types of rental expenses

There are three categories of rental expenses, those for which you:

• cannot claim deductions
• can claim an immediate deduction in the income year you incur the expense
• can claim deductions over a number of income years

Expenses for which you cannot claim deductions

Expenses for which you are not able to claim deductions include:

• acquisition and disposal costs of the property
• expenses not actually incurred by you, such as water or electricity usage charges borne by your tenants
• expenses that are not related to the rental of a property, such as
  • expenses connected to your own use of a holiday home that you rent out for part of the year, or
  • costs of maintaining a non-income producing property used as collateral for the investment loan
   
• travel expenses to inspect a property before you buy it
• expenses incurred in relocating assets between rental properties prior to renting
• travel expenses to (or other costs for) rental seminars about helping you find a rental property to invest in.

See also:

• Rental expenses to claim
• Rental properties – travel expenses

Acquisition and disposal costs

You cannot claim a deduction for the costs of acquiring or disposing of your rental property. Examples of expenses of this kind include the purchase cost of the property, fees on bank guarantees in lieu of deposits, conveyancing costs, advertising expenses and stamp duty on the transfer of the property (but not stamp duty on a lease of property; see Lease document expenses). However, these costs may form part of the cost base of the property for CGT purposes. See also Capital gains tax.

See also:

• Guide to capital gains tax 2017