Expenses You Can ' t Claim
You can ’ t claim deductions for capital expenses , private expenses , or expenses that do not relate directly to your rental property .
Capital expenses are the costs of buying a capital asset or increasing its value : for example , the cost of buying the property and making improvements .
Private expenses are things you buy or pay for that are for your own benefit rather than to generate rental income .
Expenses you can ’ t deduct from your rental income in your tax return :
• The purchase price of a rental property
• Any principal portion of mortgage payments
• Interest on money you borrow for any purpose other than financing a rental property
• Costs associated with repairing or replacing any damaged part of the property if that work increases the property ’ s value
• Real estate agent fees charged as part of buying or selling the property
• Your time when you do repairs and maintenance work
Goods & Services Tax ( GST )
GST is not charged on residential rent so this means you don ' t include rental income in your GST returns ( if applicable ).
Repairs or upgrades to a substandard investment property
You can ’ t claim expenses incurred to bring a rental property up to the required condition necessary before it can be rented . This could be substantial repairs to an existing roof , or healthy homes compliance related work for items that didn ’ t already exist at the property , e . g . installing a brand new underfloor moisture barrier .
For more detail on the claimability of healthy homes standard costs , see ‘ Healthy Homes Compliance Costs ’ on page 9 .
Initial Costs
Any initial costs associated with finding an appropriate rental property , including the cost of checking the condition of a property before purchasing it e . g . a building report
Other Exceptions
If the property isn ' t rented for the full year : isn ' t occupied by tenants ; isn ' t available to be rented out at any stage during the year ; or is only available for rent for part of the year , then you can ' t claim the full year ' s ongoing costs such as rates , insurance and interest .
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