Private ruling: Eligibility of expenses for rental property
Published: December 2011
Ruling period: Year ended 30 June 2011 | Year ended 30 June 2012.
Date scheme commenced: 01 July 2010

Ruling: Q1: Are the gas, telephone and electricity service expenses deducible for the period that your rental property was not available for rent? | A1: No.

Relevant facts and circumstances: You have a rental property and this was rented until late 2010 when it became vacant. You took no action to rent the property until late 2011 when you placed the advertising for a tenant in the hands of a real estate agent. The property was rented out a short time later. While the property was vacant you retained the connection of the gas, telephone and electricity services for your use when attending to the property and to avoid the cost for reconnection of these services at a later date.

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 (ITAA 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, or relate to the earning of exempt income. When a rental property is not available for rent the necessary connection in deriving rental income is lost and therefore no deduction for rental expenses is allowable. In your situation it is considered that your property was not available for rent from late 2010 until late 2011 when you contacted the real estate to advertise for a tenant. Therefore the utilities expenses for gas, electricity and telephone incurred from late 2010 to late 2011 are not deductible under section 8-1 of the ITAA 1997.

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