Private ruling: Rental deductions
Date of advice: 22 December 2025
Published: 9 February 2026
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Q1: Can you claim a deduction for the cost for the repairs, rates and other associated expenses in the 20XX income year when your rental property was vacant and not available as a rental property? | A1: No. Expenses relating to a rental property are allowable as deductions only for the period the property was rented or genuinely available for rent.

Relevant facts and circumstances: The property situated at Location A has always been a rental property through Company A. The tenant vacated the property without removing their possessions. You supplied a detailed report from the property manager. The report details the condition of the property both prior to tenancy and after tenancy. The final inspection report from the real estate agent, reported that the property was in a dirty state, as well as marks on the walls, ceilings, carpets and floors. You have declared the amount of $XX as a deduction in the supplementary section of each of your 20YY income year tax returns. Since the tenant vacated, the work you have done includes cleaning the property and removing all the tenants' possessions. A skip bin was required and there are still old damaged white goods left at the property that need to be removed. You did not employ anyone to clean the property, and did it yourself. You are still currently painting the house. You have not replaced the carpets or curtains yet as you are trying to complete the painting first. The property was not available for rent in the 20YY income year.

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. The high court majority in Commissioner of Taxation v Payne [2001] HCA 3 said it is well established that these words are to be understood as meaning incurred 'in the course of' gaining or producing assessable income, and do not convey the meaning of outgoings incurred 'in connection with' or 'for the purpose' of deriving assessable income. The majority further stated that the meaning of 'in the course of' gaining or producing income was amplified in Ronpibon Tin NL v Commissioner of Taxation (Cth) [1949] HCA 15 where it was held that: ... to come within the initial part of [section 8-1] it is both sufficient and necessary that the occasion of the loss or outgoing should be found in whatever is productive of the assessable income, or if none be produced, would be expected to produce assessable income... | Detailed Reasoning - Genuinely available for rent: One guideline when considering the purpose of the expenditure claimed as a deduction is to determine whether the property was genuinely available for rent. In Inglis v Federal Commissioner of Taxation (1987) 87 ATC 2037 at (71)-(72), Deputy President Todd said: ...While it is true that the property was vacant and theoretically available at all times, it cannot be said to have been truly available for letting unless some perceptible effort was being made to obtain tenants in respect of those times, or at least some step taken to draw its availability to the attention of the public, the classic method of so doing being the placing of it with an agent. The sufficiency of the steps taken is a question of fact to be decided in each case, but in this case, considering the irregular advertising and the restriction of the opportunity of renting to Canberrans, there has in my view been insufficient done for it to be able to be said that the property was available for letting for periods adequate to support the claims made... Expenses may be deductible for periods when the property is not rented out, providing the property is genuinely available for rent - that is: • the property is advertised in ways which give it broad exposure to potential tenants, and • having regard to all the circumstances, tenants are reasonably likely to rent it. The absence of these factors generally indicates the owner does not have a genuine intention to make income from the property and may have other purposes - such as using it or reserving it for private use. | Detailed Reasoning - Application to your circumstances: According to the property manager's inspection report, conducted on DD MM 20YY, the property was left in a dirty state, with marks on the carpets, floors, walls and ceilings, and ripped/torn curtains. The property has remained vacant, and not available for rent since the tenant vacated in MM 20YY. We have concluded that no deduction is available for the expenses incurred for the repairs, and other holding costs for the rental property for period the property was not genuinely available for rent. We do not consider that the repairs are substantial, but rather minor in nature. Based on information provided, the property was neither available for rent nor actually rented out during the period when all the expenses were incurred. You are required to amend your 20YY income tax returns to remove the deductions you have claimed for the property.