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

Ruling: Q1: If your local council changed the rate base of your rental property from its current resort status, would you still be able to claim your share of eligible expenses if the property remains available for rent? | A1: Yes.


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

Reasons for decision: Summary: For rental property expenses to be deductible, a property must be held for income producing purposes. An existing property will be considered to be held for income-producing purposes if the property is being rented out, available for rent, or intended to be rented when any repair activities are complete. If your property continues to be available for rent on a bona fide basis, and the rating base is changed by the council, this would not affect the eligibility of the property expenses as a deduction.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant Facts: You are co-owners of a rental property unit in a former resort which is now under administration. | The majority of the units are administrated by the former resort, with the remainder in private hands. | The administrator of the facility passes on all relevant costs to individual owners where possible. | Due to declining numbers, several services which used to be available are no longer offered, and transport services to the location have been reduced. | The complex is being charged council rates on a similar basis as if the property were comparable with active resort areas which are administered by the same council. | You wish to apply to the council to have the resort status of the property reconsidered, and so have the rates reduced to a level more in line with the present changed prospects and altered facilities offered for your property. | You have considered all avenues of advertising and promoting your rental property, including an individual website, and are of the opinion that a local agent to co-ordinate renting of the property would be an advantage. | The unit is advertised on the former resort website to find tenants, although this has recently become problematic, as individual owners are approached by prospective tenants for the best rates, and consequently the former returns are now more difficult to attain. | It is still your intention that the property will be actively available for rent.