Claiming Travel Expense for IP

If I buy a return airfare before June 30, 2017 and travel on June 30 and return in July, specifically for the purpose of IP inspection, can I claim the tax deduction of the full ticket price because I purchased the ticket in this tax year?

In other words, does the deduction work because I paid for it within this tax year? Or because travel started in this tax year?

 

If it is that close to the inspection, it should be ok if legit travel, I mean you need to give notice etc too, so you can't be buying tickets the day of inspection, can you ?

Return may be a prob if it is mid July though....

IMO

 

Have not seen legislation yet.

But if you cannot escape from the expense you have incurred it. That means it is tax deductible in 17.

The budget papers (which are light on) only talk about an expense incurred after 1 July.

 

Interesting point. Am i right in assuming my property expenses are claimed in the FY year for which they are paid so if you book flights/travel/hotels etc to inspect, repair whatever your property for next FY you can claim them this FY as long as you have paid before 30/6?

 

thats a risky assumption

 

I'm with Ross. I would imagine (typical for such laws) that a specific provision will make it non deductible and likely refer to travel made or incurred on or after 01 July. This could render a deduction claimed in the 2017 tax period as non deductible.

Its anti-avoidance. Those that draft these laws expect some would try it on and so they often draft law that way.

 

On the ATO website, its says that I can claim travel expenses for the following reason:

• visiting your agent to discuss your rental property.

This is the reason I am going.
Turns out I will book and pay in June and fly in July only. I hope I can claim this.

 

The ATO website refers to the old rules (existing law). When the law changes it will be changed. The ATO adopt that position for all law changes. Its a trap for those who dont practice in tax.

There is a minor issue noted in the budget papers (Page 29) that goes further about travel expenses that I am also waiting to see in detail. I previously have stayed silent on this as its a unsual commnet made by ScoMo on budget night. He said

This measure (sic - the travel expenses one) will not prevent investors from engaging third parties such as real estate agents for property management services. These expenses will remain deductible.

What is being disallowed is specifically .....From 1 July 2017, the Government will disallow deductions for travel expenses related to inspecting, maintaining or collecting rent for a residential rental property

I question if that means the costs of travel to meet with the agent for an existing IP (provided you dont inspect) eg changing agents or if its just states the obvious and affirms that the deduction for agents fees remains deductible. Seems a strange thing to say IMO and I question IF meeting with the REA remains deductible in limited instances.....I question then what other form of deductible travel can be made. A strange thing to say I feel.

Caution : I am NOT suggesting meeting with agents will become deductible !! But some forms of agent meetings could retain deductions.

 

No mention of 'repairs' either.

I think it would be dangerous to assume things without seeing the actual law. But we are generally not talking big money here.

 

So am I correct in assuming that travel this year till June 30 will be deductible? I had assumed that no travel claim would be allowed post May 9.

 

yes 'old' rules apply and you wold be able to deduct for travel within this financial year.

I have booked and paid for my ticket now for travel to meet my property manager/agent in July so I will just see what happens come tax time next year. Its a negligible claim anyways seeing as I am not in the highest tax bracket - just a ma/pa investor trying to get ahead and not become a burden on the state and self fund my retirement.

 

Anyone else think its ridiculous we are 12 days away from this taking affect.....and legislation not being released yet.

I cant understand why politicians think this is ok.

 

Why can't you simply discuss it over the phone?
I doubt you could deduct anything unless there and back on the same day, or overnight if further away.
Marg

 

Marg - I think that was the gist of the decision to change the rules. The scope for rorts (that the word the Treasurer used) is why the rule is being changed. A number of PMs are even using video recording to indicate property condition and sharing this with owners using cloud based file sharing services. The need to travel interstate is less that is used to be.

My only objection relates to owners who may fly to their IP and complete basic repairs between tenancy as lower cost than the PM can offer. eg If I fly to QLD to paint / refresh my IP between tenants over a weekend cost is around $350 incl paint and fares. Quote from PM was $2000+

I cant confirm if the law change will prevent this in the future yet.

 

I believe this only applies to residential not commercial or farmland ???

 

Give it a couple of years and it will be abandoned. That's how things are done in oz lately.

 

Correct.

Travel to / from farmland + deductiblity can be difficult.

 

I was at an Accountants event last month and this is my feeling. A lot of details are lacking.

As regards this non-deductibility of travel expense for IP, some attendees think that this might push some Owner-Manager to pass the work to a PM. Interesting thought!

 

And Parliament is down for 2 months. This is why the budget used to be in August.

Now they announce in May and legislate in September and if it gets passed its law by December. If anything affects that its could be March the following year.

 

So is travel to Owners Corp meeting still deductible?