Claiming Travel Expenses On An Investment Property
I have a couple of investment properties in other states. Is it true that I can claim travel expenses associated with inspecting my properties? Is there a limit on how many times each year I can do this?
Julie, Noosa, Qld
There are many benefits to owning an investment property but claiming travel expenses isn’t one of them. The Australian Tax Office (ATO) rules are clear on this issue. You can't claim any deductions for the cost of travel you incur relating to your residential rental property unless you are either in the business of letting rental properties or an excluded entity.
1. The business case
You can claim your travel expenses if you are in the business of letting rental properties. Generally, if you are an individual and you receive income from letting property to a tenant, or multiple tenants, you are not considered to be carrying on a business of letting rental properties. Rather, those activities are considered a form of investment, so you can't claim deductions for travel expenses. To be in the business of letting rental properties, the properties need to be owned by a company rather than individuals. As an individual you can’t claim for travel. You can only claim travel as a company, so you would need to have created a business that owns the property or properties.
2. What are excluded entities?
According to the ATO, you can claim travel expenses, if you're a:
corporate tax entity
superannuation plan that is not a self-managed superannuation fund
public unit trust
managed investment trust
unit trust or a partnership, in which all members are entities of a type listed above.
This is a tax matter and your specific situation may require guidance from a tax adviser. The information provided here is from the ATO website. The ATO has also prepared a very comprehensive guide.
By Kate McCallum, financial adviser and author of The Joy of Money; multiforte.com.au
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