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New rules for reporting residential property income/losses

From the 2019-20 income year onwards, you can now only claim deductions up to the total amount of income you earn from your residential rental property. You can no longer use excess deductions from your property to offset other income such as salary and wages.

Most residential properties are subject to the new residential property deduction rules (also known as the ringfencingrules). The rules do not apply to some residential properties such as your main home and residential properties that are subject to the mixed-use asset rules.

The new rules mean that your total residential rental property deductions generally cannot be more than your residential property income. If you have excess deductions, also known as rental losses, this amount must be carried forward to the next year that you earn income from your residential property. If you sell your residential property and still have excess deductions these can be transferred to another residential rental property. If you own more than one residential rental property you can combine their income and deductions if you use the portfolio method.