Private ruling: Rental deductions
Date of advice: 21 April 2026
Published: 6 July 2026
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Can you claim a deduction for the cost of the associated expenses in the 20XX income year when your investment property was vacant until being sold? | A1: Yes. Section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing your assessable. Although you listed your investment property for sale you intended to lease the property out until the settlement date and actively advertised for available tenants. Therefore, you genuinely had the property available for lease during that period. Consequently, a deduction is allowable under section 8-1 of the ITAA 1997 for the associated expenses that you incurred during the period that the property was vacant until sold.

Relevant facts and circumstances: You owned a property (the property). You had a bank loan which was solely used for the property. You leased the property out from XX/XX/20XX until XX/XX/20XX during the 20XX financial year. The tenants vacated earlier than the lease contract end date. In late XX/20XX, you listed the property for sale. Due to the uncertainty and timing of a sale, you intended to lease the property out for short term stays after the property was vacated. On XX/XX/20XX, you advertised the property for short term lease via a website. You tried to advertise the property for lease on another website, but they did not accept the listing. You approached two prospective tenants on one of the websites but received no response. At the end of the same month that the tenants vacated the property, you signed a contract of sale. The purchaser requested a two-week cooling off period and extended the settlement period to 60 days. Within three months from the property being vacated, settlement occurred.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8-1