Background:
Sam and Sue, a couple from Sydney, owned a serviced apartment in the Gold Coast, which was managed by building managers and rented out as short-term accommodation. Over the years, Sam and Sue made annual trips from Sydney to the Gold Coast. The purpose of these trips was to:
- Update and replace furniture, such as beds and TVs
- Refresh household items like curtains and bed sheets
- Repaint the apartment when necessary
Now that they’ve sold the property, they are planning one final trip to the Gold Coast to bring back some of the furniture before settlement. They’ve asked whether the costs associated with these trips—plane fares, accommodation, and transport—can be:
- Claimed as a tax deduction, or
- Included as part of the property’s cost base for capital gains tax purposes
Tax Office View: Travel Expenses Are Not Deductible or Part of Cost Base
Since 1 July 2017, the ATO has made it clear that travel expenses relating to residential rental properties are not deductible for individuals, unless they are either:
- Running a business of letting rental properties, or
- An excluded entity (such as a company or public trust)
Sam and Sue are private individuals and not running a rental property business. Therefore, they fall outside of these exceptions. In these situations:
- Travel expenses to inspect or maintain the property are not tax deductible.
- This rule applies even if the trip is for genuine maintenance or repairs.
- The same expenses also cannot be included in the capital gains cost base of the property.
This includes:
- Airfares to the Gold Coast
- Hotel or other accommodation costs
- Local transport or car hire costs
✅ Important Distinction: These restrictions only apply to residential investment properties. For commercial properties, such as retail shops, offices, or warehouses, travel and accommodation expenses may still be tax deductible where they are genuinely incurred in managing or inspecting the property.
✅ What Would Be Deductible in Other Scenarios?
- If Sam and Sue owned a commercial property (like a retail shop or office), their travel expenses could be deductible.
- If they were a company or public unit trust, they might be able to claim travel deductions.
- If they were running a property rental business (e.g., managing multiple properties full time), they may also qualify to claim.
🔍 What About the Capital Gains Tax Cost Base?
According to ATO rules, non-deductible travel expenses related to residential properties cannot be added to the cost base either. Only certain capital or acquisition costs can be included.
This means the travel costs for inspections, bringing back furniture, or meeting building managers are excluded from both:
- Annual deductions, and
- Capital gains tax calculations
Takeaway for Property Investors
Sam and Sue’s case is a common scenario. Property owners often make regular trips to maintain or update their investment properties, especially interstate ones. However, it’s important to understand:
Travel and accommodation costs are generally not deductible and cannot be included in the CGT cost base.
This applies regardless of whether the travel is for maintenance, inspection, or final clearance after sale.
Need Help Understanding Your Investment Property Expenses?
Understanding what you can and can’t claim when it comes to travel, and accommodation expenses is crucial for maximising your investment returns and staying compliant with ATO rules. As Sam and Sue’s case shows, even well-intentioned trips for property upkeep may not be deductible — and assuming otherwise can lead to costly mistakes.
If you’re unsure about the deductibility of your investment property expenses or need guidance on preparing for a property sale, the expert team at Investax is here to help. We specialise in working with property investors, providing clear, strategic tax advice that’s tailored to your circumstances.
Contact Investax today to book a consultation and ensure your investment journey stays on the right track — legally and financially.
