From the 2019-2020 income year onward, new rules apply to how excess residential rental deductions (previously known as rental losses) can be claimed for residential properties. Excess deductions will now generally be carried forward until they can be offset against residential property income.
On the Individual income tax return - IR3 you will now see fields for:
- Residential rental income - which is for residential rental properties
- Other rental income - which is for commercial properties where a loss can still be claimed.
In myIR, the Other rental income option is selected by default on the online IR3 form.
This means that customers with residential rental income need to manually select Residential rental income as well.
Due to the way income source is managed in myIR, customers with residential rental income must have both options selected (even if they do not have other rental income). If their residential rental income is a loss and they only have Other rental income selected on their form, the system will allow this to offset against their other income (for example salaries and wages).
We are changing the form so that both Residential rental income and Other rental income are selected in the 2020 return if the customer has the income source Rental property.
Customers with residential rental property income are advised to:
- make sure both Residential rental income and Other rental income are selected in the Build your return section
- leave the Other rental income fields as nil If you do not have other rental income.
If you do have other rental income (property that does not fall into the ring-fencing criteria) then complete those fields as normal.