Private ruling: Deductions - rental property
Date of advice: 16 January 2025
Published: 10 March 2025
Ruling period: Year ended DD MM 20XX
Date scheme commenced: DD MM 20XX

Ruling: Q1: Are you entitled to a deduction under Division 40 of the Income Tax Assessment Act 1997 (ITAA1997) for the decline in value of depreciating assets you acquired when you purchased a newly constructed unit which had never been occupied? | A1: Yes. You can claim a deduction for the decline in value of the depreciating assets in your newly constructed unit but only for the periods the property is rented or available for rent. Furthermore, as the strata title body is not entitled to any deductions in respect of the common property. You can claim deductions for your proportion of your lot entitlement under Division 40 of the ITAA 1997.

Relevant facts and circumstances: This private ruling is based on the facts and circumstances set out below. If your facts and circumstances are different from those set out below, this private ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You entered a contract to purchase a property. Settlement occurred on XX XXX 20XX. The previous owners purchased the property through an off the plan contract and after construction was completed, they actively marketed the property for sale. The newly constructed dwelling remained unoccupied up until settlement. You engaged a real estate agent to rent out the property. The unit has been tenanted since X X 20XX. All the fixtures, including the dishwasher, oven and dryer inside the property have never been used. The purchase contract which includes the Strata Plan Administration Sheet provides the following: • The body corporate does not own the shared assets within your building and a responsible for maintenance only. • You are entitled to claim deductions for capital works and decline in value of depreciating assets that form part of the common property in proportion to your lot entitlement. You provided the following formula as an example of an item from the common property you can claim decline in value of depreciating asset deduction: • X lifts (XX stops) x $XX,XXX each x XX/XXXXX (Unit Entitlement as per Strata Plan) = $X,XXX.

Relevant legislative provisions: Income Tax Assessment Act 1997 (ITAA 1997) section 8-1 | Income Tax Assessment Act 1997 (ITAA 1997) section 40-25