Tax Tips for Property Investors

An investment property proves to be the best savior during tax time. Tax time means reaping the fruit of labors for property investors. The reward of claiming back a raft of entitled deductions is what they usually look forward to.

For a property investor, being organised is the key to properly knowing the exact amount that needs to be claimed. Rather than waiting for the lump sum, having the savings reimbursed into your weekly pay is an option. Doing so will not only make you avoid the rush during tax time; it is also particularly beneficial when increased cash flow is needed. To get more information about this option, contact the Australian Taxation Office.

What is property depreciation?

One of the biggest deductions a property investor can claim relates to property depreciation. This deduction refers to the amount directly related to the wear and tear of your property that is claimed against your accessible income over a period of time. There are two types of allowances available for property depreciation:

(1) Depreciation on Plant and Equipment

(2) Building Allowance

For proper calculation, a property investor needs a Quantity Surveying firm to inspect the property. The surveying firm that does the inspection also prepares a depreciation schedule that needs to be submitted to an accountant for the computation of tax deductions.

We hope that most investors are familiar with the process of claiming for property depreciation. Deductions for property depreciation can amount to thousands of dollars in the first year alone but keep in mind that older properties depreciate as well.

Savings for Landlord

If you are renting out your property there are also expenses which you can claim outright. Check the list below for these types of expenses:

  • Property Advertising Expenses –all advertising costs incurred by the property owner.
  • Bank Transaction Fees – set up and management fees for bank loan and any other related account.
  • Corporate Management Fees
  • Property Maintenance Fees – expenses applicable for cleaning the property (e.g. gardening, pest control, pool cleaning, etc.)
  • Insurance Payments – this includes building and public liability insurance
  • Legal Representation Expenses
  • Real Estate Tax
  • Property Management Costs – expenses incurred for real estate agents.
  • Mortgage Interest
  • Cost for Repairs – all repair costs made for property within the tax year. Tip: It is best not to do repairs for your property at the last minute when the tax year is near its end because trades may be in high demand and not available.
  • Transportation Costs – includes cost for any trips made when inspection, repair or maintenance is done for the property.

When in doubt – you just need to collect all receipts and pass them on to your accountant. These receipts should be kept for a minimum of 5 years.

Do you have questions regarding property taxes and other property investment inquiries? Contact Properties4u today!