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Travel to see your investment property

May 05, 2011

If you travel to inspect or maintain your property or collect the rent, you may be able to claim the costs of travelling as a deduction. You are allowed a full deduction where the sole purpose of the trip relates to the rental property. However, in other circumstances you may not be able to claim a deduction
or you may be entitled to only a partial deduction.

The old wives' tale of claiming two trips per year is hogwash. You can claim as many trips as you like so long as the purpose of the trip is to inspect the property and you don't tag a family holiday onto it.

Example

Michael makes a number of visits to his rental property in order to
inspect it and to carry out minor repairs. He travelled 222 km during
the course of these visits.

On the basis of a cents-per-kilometre rate of 75 cents for his 2.8 litre car, Michael can claim the following deduction:

Distance travelled × rate per km = deductible amount

222 km × 75 cents = $166.50

 

There is potentially no deduction if the property inspection was merely incidental to the private purpose for the trip.

Example

On his way to golf each Saturday, Michael drove past the property to 'keep an eye on things'. These motor vehicle expenses are not deductible as they are incidental to the private purpose of the journey.

If you fly to inspect your rental property, stay overnight, and return home on the following day, all of the airfare and accommodation expenses would generally be allowed as a deduction provided the sole purpose of your trip was to inspect your rental property.

A common mistake is to claim a deduction for the cost of travel when the main purpose of the trip is to have a holiday and the inspection of the property is incidental to that.

Where travel related to your rental property is combined with a holiday or other private activities, you may need to apportion the expenses. You may be able to claim local expenses that are directly related to the property inspection and a proportion of accommodation expenses.

Example

Paul and Kylie spent $700 on airfares and $1000 on accommodation when they travelled from their home to a resort town, mainly for the purpose of holidaying, but also to inspect the property which they own
there. They also spent $70 on taxi fares for the return trip from the hotel to the rental property. They spent one day on matters relating to the rental property and nine days swimming and sightseeing.

No deduction can be claimed for any part of the $700 airfares. They can claim a deduction for the $70 taxi fare. A deduction for 10 per cent of the accommodation expenses (10 per cent of $1000 = $100)
would be considered reasonable in the circumstances.

 

The total travel expenses they can claim therefore amount to $170 ($70 taxi fare plus $100 accommodation). Accordingly, Paul and Kylie can each claim a tax deduction of only $85.

Tags: 101 WaysProperty

Author: Mr Taxman

Comments

"In reference to visiting overseas rental property and tax deduction of costs, if a travel diary was kept and it provided evidence that for example 5 days were spent undertaking activities which were directly related to that property, would that not count as evidence to claim tax deductions? You would fly in, sort out accommodation on Day1, day 2 would be visiting the rental agent and other admin, day 3 would be visiting the property and talking to the letters, day 4 would be visiting stores and vendors for potential repairs and maintainable activities, day 5 to confirm all with meeting with rental agent and then fly out again. If not, why?"

By: Patrick on May 29, 2012 7:29AM

"That would be fine if that is all you do ... but if your trip has a private component as well then the ATO may frown somewhat. Note that they can go through all of your bank & credit card records & get a gauge on what you are doing each day. Just be very careful with what you do."

By: Mr Taxman on May 29, 2012 11:51PM

"if the property is soley in my name, but my husband makes the trip to inspect it on my behalf, can i claim the cost of the flights? the trip is purely for property related business."

By: Nicole on May 30, 2012 7:22AM

"You have stumped me Nicole -best that you ring up the ATO on this one. My thoughts are that they could be claimed as it is virtually a contractor relationship & you are being charged travel expenses but I am not 100% confident."

By: Mr Taxman on Jun 02, 2012 12:55AM

"I have 2 investment properties and travelled approx 3000km to inspect one and almost 6000km for the other. Can I claim the cents per kilometre method for the first one and the 12% of original value for the second one (as it is over 5000km). Or if I use the 12% one does that mean I can't claim the cents per kilometre method at all??"

By: Nikki on Jul 18, 2012 8:46AM

"You can only claim one method for your car travel. Note that the maximum you can claim is 5000kms per car per year."

By: Mr Taxman on Jul 26, 2012 11:40AM

"Hi Mr Taxman, What if the car is joint owned husband and wife, can husband claims 12% method while wife claims cents per km? Thanks lots!"

By: NIC on Oct 20, 2015 1:35PM

"can you claim all the travelling cost when you are inspecting the property before handover by the builder for your investment property?what if you have to go back to make sure they have fixed any faults?"

By: sammy on Aug 02, 2012 3:51AM

"You wouldn't be able to claim costs prior to earning assessable income."

By: Mr Taxman on Aug 06, 2012 1:03PM

"If I fly from Perth to Sydney on a Friday do I have to inspect my investment property on that day or can I fly in Friday inspect on Saturday and fly back on Sunday"

By: Rhonda on Dec 06, 2013 11:56AM

"You can travel anytime you want but the ATO will be interested in what portion of your trip is business v personal. Sounds like stretching it over a few days would be 50/50 & hence you could only claim in that portion at best."

By: Mr Taxman on Apr 09, 2016 3:48PM

"Dear Mr Taxman Can you advise if the property is in my husband and my names (joint owners) but he is retired and does not pay any tax, if he flies to inspect the property can I claim this from my tax?"

By: Christine Buckland on Jan 06, 2014 4:17AM

"He would need to claim his share of expenses against his share of income in his tax return."

By: Mr Taxman on Apr 09, 2016 3:48PM

"Hi If I have to bring my children with me to inspect a foreign property can I claim the costs of their flights as well? I have no choice but to bring them thanks "

By: Emma Collins on May 20, 2015 5:15AM

"Definitely not Emma."

By: Mr Taxman on Apr 09, 2016 3:44PM

"If I were to fly up to QLD (from Sydney) on a Wednesday, inspect the property on the Thursday, visit the agent on the Friday and fly back to Sydney on the Saturday, can I claim all of that travel back?"

By: DFitz on Oct 20, 2015 10:04PM

"My query is why cant you do all visits on the one day? A half hour visit one day wouldn't necessarily justify claiming the whole day of accommodation."

By: Mr Taxman on Apr 09, 2016 3:46PM

"hi, if I have a rental in the UK can I claim expenses to go and check on it?"

By: wayne on Mar 31, 2016 12:01PM

"Potentially Wayne. However if you are pretty much spending most of the trip for personal purposes then potentially none is deductible other than the incidental cost of the day/s that you are sorting out investment property (together with any repairs that you spend money on). That includes not being able to claim any of your airfare as the ATO would consider it to be a personal expense. "

By: Mr Taxman on Apr 09, 2016 3:44PM

"If I purchase flights this financial year for travel next financial year to check on my interstate property, in what year do I claim the cost of the flights?"

By: Annette on Jun 21, 2016 3:53AM

"You can claim in the 2015/16 financial year although ensure that you make any adjustment for private portion of trip if you are not only seeing the property as per ATO advice."

By: Mr Taxman on Jul 10, 2016 9:42AM

"Your effort and dedication seen in this blog is totally fantastic. Good work. "

By: Guru Karanam on Mar 09, 2017 4:54AM

"I have a unit in Cairns which is vacant for a few days and I would like to check it. Can I claim air fare etc if I am staying in the unit while I am there? Thank you Veronica"

By: Veronica Lennox on Jun 08, 2017 4:00AM

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