Property investors to lose travel expense tax claims: 2017 Budget

Negative gearing remains, but the entitlement rules are being tightened around what can be claimed by property investors on travel expenses.

Investors will no longer be able to claim tax deductions for travel expenses “related to inspecting, maintaining or collecting rent for a residential rental property” from July 1.

Of the nation's 2 million landlords, about 1.3 million are negatively geared.

The measure is intended to “address concerns that many taxpayers have been claiming travel deductions without correctly apportioning costs”.

The government expects the travel changes to bring in an extra $540 million in revenue over the next four years.

Australia's 1.3 million-strong contingent of negatively geared landlords will no longer be able to claim travel expenses for inspecting their residential properties.

It also applies for travel to collect rent on a property.

At present, travel-related ­expense claims related to inspections but in reality ‘holidays’ is costing the government more than $160 million a year.

"This is an integrity measure to address concerns that many taxpayers have been claiming travel deductions without correctly apportioning costs, or have claimed travel costs that were for private travel purposes," the budget papers say.

It does not apply to commercial property.

Property management fees for third parties such as real estate agents will remain tax deductible.

The 2017 budget sees rules being tightened around what can be claimed by property investors, specifically around depreciation deductions.