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Rental Income and Expenses
🏠 Rental Income You must declare all income earned from renting out a property, including: What to Include – Rent payments (weekly/monthly)– Bond money retained (e.g. for damages)– Insurance payouts (e.g. loss of rent)– Reimbursement of expenses by the tenant– Booking or service fees (e.g. Airbnb, Stayz)– Government subsidies (e.g. rental assistance)– Lease premiums or lump sum payments– Part-year or short-term rental income 📌 Tip: Even if your property is rented out only for part of the year (e.g. Airbnb), you must apportion income and expenses accordingly. 📄 Rental Expenses You can claim deductions for many expenses related to your rental property. These are categorized as: 1. Immediate Deductions (same income year) – Advertising for tenants– Council rates, water charges– Loan interest– Property agent fees/commissions– Repairs & maintenance (not improvements)– Pest control– Insurance (building, contents, landlord)– Body corporate fees– Cleaning, gardening, and security– Depreciation on assets (under $300 immediate)– Travel for inspection (Note: Limited after July 2017 for individual owners) 2. Depreciable Assets (decline in value) Furniture, appliances, carpet, blinds, hot water systems, etc.Claimed over the effective life 3. Capital Works Deductions Structural improvements (e.g. extensions, renovations)Claimed at 2.5% per year over 40 years 4. Non-Deductible Items – Acquisition costs (e.g. stamp duty, conveyancing)– Borrowing costs over $100 (deductible over 5 years)– Expenses not related to earning rental income 🔍 Common Mistakes – Claiming the full deduction when property is not rented for the full year– Claiming initial repairs (considered capital)– Not apportioning expenses between private and rental use– Forgetting to declare all types of rental income 📅 Record Keeping Keep records for:– Purchase and sale contracts– Loan and interest documents– Receipts for expenses– Tenancy agreements– Property management statements Records must be kept for at least 5 years.
