Mrs Jackaroo

Has anyone ever heard of this? A fellow pom told me yesterday that if you rent out a property (be it in Australia or anywhere else) then you can claim back one trip to visit that property each year to inspect it??

Surely this isnt right??

DadAgain

that woudl be right - but

1) You're only claiming a tax deduction fo its not "FREE" it just means you'll get 40% back in your tax return

2)To claim this as an Australian tax return wouldnt you have to have your rental earning an Australian income? Do you really want to claim the rental income on your UK house as Australian taxable income?? Probably not....

Mrs Jackaroo

Well bugger me! The 'profit' from our UK property is negligible if they take into account the mortgage attached to it??

MartinLuther

Also for the whole trip to be tax deductable then the inspection has to be the whole purpose of the trip. If you do other stuff, like visiting the family or having a holiday then you can only deduct a portion of the trip.

Mrs Jackaroo

Certainly something to think about. At the moment the difference between our mortgage and the rental income is only about 50 pound, so thats all that would be liable for Australian Tax, is that right?

DadAgain

As long as you avoid talking to a qualified internationaly experienced accountant and take all your financial advice from clueless fools in an internet forum - What coudl possibly go wrong?

Mrs Jackaroo

Sounds like a damn good idea to me!!

NickyC

The ATO publish a guide to Rental Property deductions etc (in an attempt to clarify what can/can't be claimed and to stop some of the lurks that landlords have traditionally been quilty of ).

Link here: http://www.ato.gov.au/individuals/co...t/00096828.htm

In a nutshell, they say:

"Where travel related to your rental property is combined with a holiday or other private activities, you may need to apportion the expenses.

If you travel to inspect your rental property and combine this with a holiday, you need to take into account the reasons for your trip. If the main purpose of your trip is to have a holiday and the inspection of the property is incidental to that main purpose, you cannot claim a deduction for the cost of the travel. However, you may be able to claim local expenses directly related to the property inspection and a proportion of accommodation expenses."

MartinLuther

I'd pay the tax. It would probably cost less than the accountant (even when you tax deduct the accountant's fee).

Another point is that foreign property losses cannot be claimed against Aus income - so although you may benefit eventually it won't be an immediate benefit.

MartinLuther

My current score is:
- Accountants that have got it wrong = 4
- Accountants that have got it right = 1

OzSheila

And conversely if the main purpose of your trip is to inspect your property and at the conclusion you have a few days holiday I would argue that you can claim a full deduction for the cost of the travel.

NickyC

It would be nice if that was the case - but they do quite specifically say:

"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."

So a 2-day trip to the UK will probably be 100% claimable, but anything longer than would be asking for close scrutiny by the ATO!

Katherined0

Have heard that this is only if you can justify the total trip being to check / do maintenance etc with the property. If you do other things while there or stay elsewhere then it would be difficult to justify.....

Grayling

You are legally obliged to declare all your worldwide income to
the ATO.

If you don't and are caught out you will face severe penalties.

G

Grayling

Not necessarily.

Why would you expect the ATO to effectively pay your mortgage?

Get professional advicve.

G