It’s not uncommon these days for home owners to move to a new property and retain their original home as a rental property.

In this instance the rental income is assessable and the interest on an existing loan becomes deductible to the owner…now landlord!

Quite often there are some repairs that need to be undertaken to make the property more attractive to potential tenants, however many home owners make the mistake of conducting these repairs before earning rental income, and then cannot understand why their accountant is unable to claim a straight out tax deduction?

A landlord is only entitled to claim a deduction for expenses incurred (including repairs and maintenance), if the property is held or used for income producing purposes at the time the expense was incurred.

If the landlord incurs the expense before the property is genuinely available for rent, the Australian Taxation Office (ATO) will not allow a deduction for the amount.

If possible, the landlord should delay conducting any repairs to their former home until it is rented to tenants or genuinely listed with a real estate agent.

PS If you do decide to rent out your former home, please make sure you get a valuation at the time for Capital Gains Tax purposes!

Regards