A previous poster said that you just apportion the expenses (including airfares) based on the portion of time that was for inspecting the rental property. However, from my understanding the following situations would hold true and contradict the opinion.
Situation 1.
Fly to rental property and spend 1 day inspecting and doing minor repairs.
Airfares? Deductible.
Accommodation costs? Deductible.
Situation 2.
Fly to rental property and spend 1 day inspecting and doing minor repairs, then go and spend 8 days on the beach, isn't it lovely having a rental property on the Gold Coast.
Airfares? Not deductible as the main intention of the trip is for a holiday. (I would presume it'd be VERY hard to justify in an audit that the trip was for the repairs and the holidaying was incidental)
Accommodation costs? 1/9 of the cost deductible.
Situation 3.
Fly to rental property and spend 4 days inspecting and doing minor repairs, then go and spend 3 days relaxing on the beach.
Airfares? Deductible 100%. The intention of the trip was to do the repairs, the holidaying was merely incidental.
Accommodation? 4/7 of the cost deductible.
This is not a final verdict in anyway, it's my opinion and open for discussion. I will try and look for some case law to back it up, I think it was tried when someone tried to claim the full airfare to an overseas conference that had a holiday attached.
As you can see though its really the intention of the holiday (and you have to be able to convince the auditor). The logic behind it as I understand is that if you go on a trip to inspect your investment property then you would incur that airfare regardless of if you holidayed after inspecting or not and hence fully deductible. The same logic holds true and is shown clearly in the ATO Rental properties guide, that if you fly over and the main purpose is for holidaying then the entire flight is not-deductible even if you did an inspection.
Feel free to discuss, I don't mind being wrong
"If you fly to inspect your rental property, stay overnight, and return home on the following day, all of the airfare and accommodation expenses would generally be allowed as a deduction."
"If you travel to inspect your rental property and combine this with a holiday, you need to take into account the reasons for your trip. If the main purpose of your trip is to have a holiday and the inspection of the property is incidental to that main purpose, you cannot claim a deduction for the cost of the travel. However, you may be able to claim local expenses directly related to the property inspection and a proportion of accommodation expenses."
Sourced from
http://www.ato.gov.au/content/downloads/NAT1729_07.pdf
