Private ruling: Rental property deductions
Published: April 2014
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013 | Year ended 30 June 2014 | Year ended 30 June 2015
Date scheme commenced: 1 July 2010

Ruling: Q1: Are you entitled to a deduction for the payments you make toward your ex-spouse's investment property as a result of a court order? | A1: No.

Relevant facts and circumstances: As a result of a court order, you are responsible for paying a percentage of all costs associated with an investment property. The property was purchased during your marriage but in your ex-spouse's name. Your ex-spouse remains as the only name on the title of the property. You do not receive any income from the property. You were under the impression that the property would be sold not long after the court order. But this has not happened and a number of years later you are still contributing toward the expenses of the property. You have made the payments direct to your ex-spouse.

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

Reasons for decision: Summary: Section 8-1 of the Income Tax Assessment Act 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature. You can claim deductions for certain expenses you incur for the period your property is rented or available for rent. However, you cannot claim expenses of a capital or private nature. A taxpayer's marital arrangements are regarded as being private in nature. The payments you make toward the expenses of this property are not expenses incurred in gaining or producing your assessable income from a rental property as it is considered an expense relating to your marriage settlement. Accordingly the expenses are regarded as being of a private or domestic nature and you are not entitled to a deduction for this expense.