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Hi there

Got some great responses last time I posted here so hoping for a similar result!

I am a beneficiary of a deceased estate split into 3. We recently put the property up on Airbnb for some rental income whilst we wait for the property to be sold.

We did some work to the property readying it for lease such as painting walls, purchase of linen, crockery etc.

1) Can these expenses be claimed? Obviously it's work done prior to being leased but integral to be able to do so. Or does any receipt need to show that the date of purchase was AFTER the commencement date of lease?

For our tax returns, we will be splitting income/expenses between the 3. The property had no TV or Vacuum and so one party paid for these items out of their own personal money as they will take these items as soon as the property sells.

2) Will their be any red flags if one party claims higher expenses despite splitting income by 3?

Looking at it now, I guess if the answer to question 1 is 'NO' then question 2 is probably void as these items were obviously purchased before our first tenant.

Thanks so much for assistance. Great community of help!

Steph

2 years ago

Responses

Hi Steph,

I think a trip or call to your accountant may be in order. I believe that the painting and any structural repairs can be claimed but the personal items can’t be.

You can look up the ato.gov.au for guides to rental properties which are pretty comprehensive

Best of luck
Scott

Hi Steph,

Is the property still owned by the estate or has it been passed out to the three of you as beneficiaries?

If still owned by the estate it's the estate that will claim (or not) the items you have mentioned above not the three of you as individuals.

Either way I'd be involving an accountant as the ATO has made it very clear they will be cracking down on AirBnB & Uber income so you are already in their sights, you'll want to tread very carefully.

All the best.

James

Hi Steph,

Scott is on the money: there is too much going on here to give you a straight answer.....and there are too many what ifs

Firstly has the estate been finalised, or is the property still held in the estate?? This itself is critical, because if the property is owned still by the estate then it is the estate that needs to report the income and claim any expenses......

SEcondly the work done on the house is likely to be capital in nature.....each case is different so you need to look at what was done, on an item by item basis......but if you did a lot of small things that doensnt necessarily make them individually "repairs".....so off to the accountant with this one:)

Thirdly: if one party incurs a higher cost than the rest, and you guys have agreed that everyone can catch and kill your own deductions, then I would say that there is no reason why one persons deductions must be the same as anothers. BUT bear in mind this is affected by who actually owns the property.....because if the property is held by the estate then none of you has any assessable income to offset with allowable deductions......another good reason to track down a decent bean counter.

My last comment is the literature put out by the ATO: the ATO does not write the law. It doesnt decide how the tax system works. It interprets the legislation and administers the taxation system. PArt of what they do is provide guidance to taxpayers on how to apply the law.....based in the ATO interpretation of the legislation.

What this means is that the ATO will put their "spin" on a given issue. And trust me that the ATO "spin" os quite often a LONG way from how the law can be interpreted by some people.

Sooooo, by all means have a look at the ATO for their guidance, because it is important to know how the ATO will react to a certain issue. Then talk to a CA or CPA who knows what they are on about. Then make up your own mind about what you want to report in your tax return....its the SELF ASSESSMENT SYSTEM......which means it is really up to you to decide how to report your income.

good luck, I hope you find a good CA/CPA who can assist you with your AirBNB.

cheers

Totally agree with what Brendan has mentioned, I don't think their is anything else I can add which could be of any help.

Cheers.

2 years ago

Thank you all for the comprehensive answers.

It is still in the estate as we are currently awaiting Grant Of Probate. I will definitely seek professional advice based on your recommendations.

Thanks

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