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motor vehicle expenses and other expenses in collecting rents and in connection with maintenance and repair of the property. You might also wish to look at the travel deduction topic if you have to travel interstate or long distances to administer rental properties

fee for use of safe deposit box to hold title documents

secretarial and bookkeeping expenses

audit fees where reasonable necessary

tax advice, and return preparation expenses, etc

Legal expenses incurred for revenue type expenses and receipts which are not capital, private or domestic in nature

Borrowing expenses

Mortgage discharge expenses

If you are claiming depreciation…

If the plant or articles are not new, in other words, if they have been previously owned or used by the owner or occupier of the premises, it is necessary to determine their depreciated value at the date on which the rent income began to be derived. This 'written down value' would be calculated by doing the depreciation calculations on the property from the time they were acquired, to the time they began to be used in the rental property.

So, when purchasing a property, it makes sense to get the vendor to nominate a separate value for depreciable fixtures such as

carpets,

curtains,

hot water system, etc

as part of the contract of sale.

There may be Government charges that are levied on such items if they are greater than a threshold amount, so it makes sense to work with the vendor to ensure the highest possible amount that will not attract extra charges.

The vendor may well have to pay extra tax as a depreciation balancing charge if the fixtures are valued at more than his written down value, so you may have to negotiate a mutually acceptable valuation.

The CCH Master Tax Guide lists these and other expenses, which may be claimed at para 14-650.

Remember to check the availability of capital allowances (building write off) for any rental property in the capital allowances topic

Don't forget to reduce the deductions if the property was used for private purposes

If the house was used by the taxpayer for private purposes during the year, the deductions must be reduced to reflect this.

If the taxpayer lived in a house for 6 months then rented it for 6 months the deductions would be reduced by half.

Rental income from jointly owned properties

The definition of partnership in the Assessment Act is...

an association of persons carrying on business as partners .... or ...

in receipt of income jointly ....

However the definition in the state partnership acts, and at law generally, reserves the definition only for persons carrying on business...

So the Assessment Act includes more situations in the definition of a partnership, than does more general law. The mere receipt of income from rental property would not constitute carrying on a business. But for purposes of the Assessment Act, where people receive such income jointly, they are considered to be carrying on a partnership.

Answer this question….

Husband and wife rent jointly owned property under an agreement that husband receives 25% of income and 100% of losses, and wife receives 75% of income.

Net loss = $100 - how much loss should wife return.

In McDonald's case CCH Master Tax Guide para 5-000 the High Court held that even though the taxpayers were partners under tax law, they were not under general law because they were not carrying on a business. Accordingly the agreement that the husband was liable for all losses was ineffective.

It is possible that the letting of property could amount to a business. However in the most usual case of husband and wife letting a jointly owned property, the net income or loss must be shared according to the legal interests of the co-owners (whether joint tenants or tenants in common) See also Income Tax Ruling 93/32.