Private ruling: Income tax: rental property deductions
Date of advice: 26 April 2019
Published: June 2019
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Are you entitled to a deduction for rental property expenses where the property is damaged and unable to be rented? | A1: Yes. The Commissioner is satisfied that but for the structural defects, the property would be available for rent.

Relevant facts and circumstances: You own an undivided half share of the property as tenants in common in equal shares. You purchased the property as an investment property. Construction finished on the property in 20xx. The tenant moved into the property the following month. The tenant experienced issues with the property. The tenant vacated the property in 20xx citing the issues with the property as the reason for vacating. On vacating, a detailed inspection of the property was undertaken where building defects were itemised. Recommendations were made for structural repairs. You were advised not to rent the property until after the repairs were undertaken. There is a dispute as to who is responsible for fixing the defects. The repairs have not been completed. Once the repairs are completed, you will rent the property. You have incurred expenses for the property including: ● Council rates ● Water rates ● Loan interest ● Landlord insurance ● Body corporate levies ● You have other deductions including ● Capital allowances ● Capital works

Relevant legislative provisions: Income Tax Assessment Act 1997 section 8(1) | Income Tax Assessment Act 1997 division 40 | Income Tax Assessment Act 1997 division 43