Visiting Investment Property

Hi Nick,

Rental property inspections can be claimed for as many trips are necessary or appropriate in a given year.

If repairs are being carried out, or there are changes in tenants or property managers, more inspections than normal may be required. So more claims can be made.

It would be wise to document the trips. This would involve arranging the inspection trip to be accompanied by the property manager, and following up the trip with a letter to the property manager, thanking them for their assistance. They will have their record of the trip, however the more documentation that there is of the trip the better.

If the property is co-owned with your wife or another person, then the travel expenses of that person can be taken into account and claimed. Travel expenses would include –

* airfares
* train fares
* taxi fares
* car hire
* fuel, repairs and insurance
* telephone calls
* meals & accommodation

Where air travel is required, it would be wise to maintain a travel diary to document the trips and who was met, what business was conducted and the like.

If two people own the property through a company or Trust, then the same rules as above apply. However, it would be difficult to see how children accompanying the owners on the trip could be seen as tax deductible. Section 26-30 disallows travel expenditure of relatives not involved in the income-producing activity.

The amount of the expenditure is only limited by the amount that cannot be attributed to the income producing activity. This refers to what would be categorized as private or capital in nature. So where private business is conducted during the trip, an apportionment is appropriate.

If the property is still under construction, and it is a rental property investment, the income producing activity has not commenced, so the expenditure is capital in nature – the only exemption is interest that is on revenue account.

Christopher Raynal
Master Accountants Group Limited
PO Box 46018 Herne Bay
Auckland New Zealand
Ph +64 9 360 3259
Fax +64 9 360 2180
http://www.masteraccountants.co.nz