Travel Expences for tax

[smallbuyer]

Hello,

Just trying to get a better idea about travel expenses for rental properties. I have been under the impression you can only claim one trip per F/Y to your rental property if an agent manages it (which is a long way so includes airfares/hotels/hire car). However what about if you manage it yourself? How many times is it reasonable to claim for inspections? Surely 4 times would be easily justifiable?

Also what about if you are doing your own repairs and maintenance on the house? Can you claim the travel in that? If so is it 'travel' or part of the repair (or capital expense if its a capital item)

Any comments/ideas welcome.

Cheers,

Smallbuyer

 

[MIW]

Hello,

Just trying to get a better idea about travel expenses for rental properties. I have been under the impression you can only claim one trip per F/Y to your rental property if an agent manages it (which is a long way so includes airfares/hotels/hire car). However what about if you manage it yourself? How many times is it reasonable to claim for inspections? Surely 4 times would be easily justifiable?

Also what about if you are doing your own repairs and maintenance on the house? Can you claim the travel in that? If so is it 'travel' or part of the repair (or capital expense if its a capital item)

Any comments/ideas welcome.

Cheers,

Smallbuyer

If you are managing it as a business and you have genuinely travelled or made repairs there then I do not see any reason why you wouldn't be able to claim, that, if you can prove it?
If an agent is managing it then you are an investor not running a business then you would know from tenancy agreement that there is a limit on how many times you wish to do inspections (I think you may be limited to 4 - unsure though).
Having a trade person quoting and fixing repairs, I would think that's not an inspection.
So any expense related to generating an income in your business would be acceptable but not form the investment side of things.
It's like say investing in BHP shares, and I decided as a shareholder to inspect their mines, well can you see the point? I may be allowed once, unsure for what?????

 

[Paul@PFI]

Hello,

Just trying to get a better idea about travel expenses for rental properties. I have been under the impression you can only claim one trip per F/Y to your rental property if an agent manages it (which is a long way so includes airfares/hotels/hire car). However what about if you manage it yourself? How many times is it reasonable to claim for inspections? Surely 4 times would be easily justifiable?

Also what about if you are doing your own repairs and maintenance on the house? Can you claim the travel in that? If so is it 'travel' or part of the repair (or capital expense if its a capital item)

Any comments/ideas welcome.

Cheers,

Smallbuyer

There is no defined number of trips that are allowed. (Min or max) Provided travel is undertaken after the property commences to be rented the travel should be deductible when factually taken and there is a purpose to the travel. What rings alarms for ATO is multiple trips where is really excessive and the duration for flights etc is like 3 nights to the Gold Coast etc and there is no purpose ie not agent meeting etc. Details of who you met, why etc would assist to support a claim. The ATO can check and little lies = penalties and disallowed deductions. Obviously a private use + rental element. You may need to adjust for private use and comply with substantiation rules for travel and even maintain a travel diary.

You can travel to undertake own repairs and if it is a repair the costs should also be deductible. If you combine multiple activities in one trip you may need to apportion - ie repairs + improvements (capital). Meals are generally not deductible. If you undertake own repairs there is no labour element.

 

[smallbuyer]

Thanks for your replies. Regarding travel related to capital items or repairs would the 'travel' for this be part of the 'repair' or 'capital work'.
One would assume that the ATO would not be happy if the travel and parts to do the job = more than the cost of a tradie to do the job.

I would have thought being in the business of property management/rental is not as good as you may have CGT issues with the 50% discount?

thx

 

[Paul@PFI]

Thanks for your replies. Regarding travel related to capital items or repairs would the 'travel' for this be part of the 'repair' or 'capital work'.
One would assume that the ATO would not be happy if the travel and parts to do the job = more than the cost of a tradie to do the job.

I would have thought being in the business of property management/rental is not as good as you may have CGT issues with the 50% discount?

thx

It is exceptionally rare to classify a person as being in business where they earn rental income.

On the issue of deductions exceeding commercial costs then yes the ATO could enquire into why someone may do such a thing. Sometimes its far far cheaper to DIY and at other times its just not viable. eg : Drive to Brisbane return from Sydney to change a light bulb. You could expect them to give the claim some scrutiny.