Due to Covid-19, some new circumstances affect tax outcomes for residential rental properties, these include:

When Tenants Can’t Pay

If Covid-19 has affected your tenant’s income, this may affect the income you receive from your residential rental property.

You can still claim deductions in your tax return if your tenants are unable to pay their rent under the lease agreement because their income has been affected by the pandemic and:

• You received less rental income as a result
• You continue to incur normal expenses on the property

You can also claim deductions if you reduced your tenants’ rent to allow them to stay in the property due to Covid-19 for commercial, arm’s length reasons.

Deductible Loan Interest

Interest is deductible on your loan:

• If it continues to accumulate because it is an expense you have incurred
• Even if the bank defers the repayments

Back-Paid Rent or Insurance for Lost Income

If you receive a back payment of rent or an insurance payment for lost rental income, you should declare this as assessable income in the tax year in which you received it.

Instant Asset Write-Off Does Not Apply

If you’re a property investor, you cannot access the instant asset write-off deduction for the property.