Do you live across the country from your rental property or just around the corner?
If you bought a rental property as a money maker and manage it yourself, there will be times when you will need to pay your income earner a visit. It could only be once a year for an annual inspection, or you could be taking weekly trips to tend to the landscaping. You may use your car to get there or hail a cab but, either way, you will tab up some travel expenses. The good news is that these expenses are deductible against any income, rental or otherwise, you received during the financial year.
When can I claim travel expenses?
Let’s take a closer look at the times when you can (and can’t) claim travel expenses as tax deductions.
You can claim a deduction for travel to and from your rental property if the main purpose of the trip was to inspect and maintain the property. In other words, work on the property has to be the primary reason for the trip; any thought of combining expenses specific to your rental property with others not so related should be set aside.
However, you can also claim the cost of overnight accommodation and meals if:
- the property you own happens to be far away from your home (like an apartment in Mermaid Beach while living in Melbourne), OR
- it would be unreasonable to expect you not to stay near the rental property overnight when conducting an inspection
So, can I claim a deduction if I travel for property maintenance AND vacation?
Let’s say you are planning on vacationing at a resort in Bondi Beach for 5 days. You live in Melbourne and own a rental property close to the resort that you’re staying at. You figure to conduct your annual inspection on the one day you could spare from your busy sun tanning schedule. On that day, you take a taxi from the resort to your property. Here’s how it works tax-wise:
- You cannot claim your expenses for traveling from Melbourne to Bondi and back but you can deduct your taxicab fare for getting from the resort to your property and the one day of accommodation (20% of your resort cost) that you spent at your property.