Property Investors That Live In Their Rentals Will Pay More Tax

In the 2018-19 financial year, one in four investors lived in their property before renting it out.

Recent research from BMT suggests that, in the 2018-19 financial year, one in four investors lived in their property before renting it out.

This statistic shows a 2.3 per cent increase in this action, compared to the previous financial year.

But why?

Living in a property before renting it out to tenants has always been an option for investors.

Some of the various reasons for this decision may include: to avoid having two mortgages at once, to allow more personalised renovations, to allow for DIY renovations, or simply because they hadn’t originally planned to rent it out in the future.

Tax implications

Due to certain laws that were implemented in 2017, tax deductions cannot be claimed for the decline in value of previously used plant and equipment in rental premises used for residential accommodation.

By choosing to live in the property while renovations are taking place, investors could be losing significant dollars in tax deductions.

Hence, it is recommended that investors who plan to install new plant and equipment assets make the additions after they have moved out and the property has been advertised for rent.

It should be noted that this problem will only occur for plant and equipment assets. Other structural renovations, such as new walls, kitchen cupboards, toilets and roof tiles can still be claimed by owners of income-producing investment properties.


To understand the ins and outs of property tax law, consider chatting to skilled tax champion.

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