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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.

We have now updated myIR so both residential rental income and other rental income are pre-selected for the 2020 return if the customer had the income source ‘rental property’ in 2019.

Customers with residential rental property income are advised to complete the return with the income source(s) that apply to them (it could be both).

If you do not have other rental income, leave the other rental income fields as nil. If you do have other rental income (property that does not fall into the ring-fencing criteria) then complete those fields as normal. For the 2021 income tax year, we will pre-select the correct rental income source types in myIR (so the system won’t default to select both types).

New rules on reporting income tax on rental properties