Property Tax Deductions – What has changed?

Property Tax Deductions – What has changed?

Do you remember the Federal Budget measures announced in May 2017 to reduce the scope of rental property tax deductions that can be claimed for residential properties? These changes are now law and are effective from 1 July 2017.


What property tax deductions have changed?

The introduction of the new laws resulted in the removal of the following residential rental property tax deductions for property owners

  • Travel deductions to inspect, maintain residential rental properties and collect rent
  • Depreciation deductions for second hand items acquired for use in rental properties. This applies to second hand assets purchased from 9 May 2017 onwards


Travel Tax Deduction Example

Josie is a dentist living in Newcastle who owns two residential rental properties. Josie pays for flights and overnight accomodation to the Gold Coast in February 2018. The travel is to inspect damage to the two residential rental properties by the current tenants.

Josie wants to know if these costs can be claimed as tax deductions against the rental income she earns.

As the two properties are residential rental properties Josie can not claim the flights or accomodation as a tax deduction under the new rules.

What impact will changes to property tax deductions have?

The removal of a tax deduction can have a significant impact on the cashflow you earn from your rental property. A reduction in tax deductions against the rental income earned can result in less of a tax refund or additional tax payable leaving less free cashflow to pay down debt.

Is there any way I can still claim these property tax deductions?

There are some exemptions and exclusions which can lessen the impact of the rules. Some of the key exemptions available include

  • residential property owned through a company
  • property that is commercial rather than residential
  • carrying on the business of renting properties


If you are in the Newcastle and Lake Macquarie area and would like to understand how the changes impact purchasing or holding a residential property or to review the structure your property holdings are held in contact A Squared Advisers on 02 4959 3882.

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