As summer draws near, many investors block out availability of their rental property and make use of it themselves for their own holiday down the coast or further afield.
If this is you, it’s prudent to note that when claiming rental expenses, you cannot claim for the period that you occupy the property yourself or make it otherwise unavailable for public rent.
The ATO confirms that expenses you’re claiming must relate to periods where the property was rented or was ‘genuinely available’ for rent.
Furthermore, says the ATO, if you place ‘unreasonable or stringent conditions on renting out the property that restrict the likelihood of the property being rented out, you will not be entitled to claim expenses.’ These conditions include:
– setting the rent above the rate of comparable properties in the area, or
– placing a combination of restrictions on renting out the property, such as requiring prospective tenants to provide references for short holiday stays and having conditions like no children or no pets.
It’s certainly true that many holiday-makers expect to bring their fur babies with them these days, so the ATO’s stance on the matter is perhaps reasonable.
On a similar note, here in Canberra, the recent introduction of changes to the ACT Residential Tenancies Act means that long-term renters are now also in a better position to request a pet live with them (see http://bit.ly/petsinrentals).
For all investment property matters, our team has a wealth of experience, so please get in touch if we can offer further advice.