Professionals Nowra With tax time just weeks away, it’s a great time to start organising your tax deductions, and determining what can actually be claimed for your investment property. To start with, you should aim to keep all your personal, living and family expenses separate from your investment property expenses, particularly any home office or travel expenses. Not only will it be easier to keep track of, but will also ensure you don’t run into any trouble with the ATO. This said, it is generally acceptable to claim travel costs relating to inspecting your investment, however documentation must be accurate.
One of the most common mistakes property investors make when it comes to tax is not claiming depreciation on their investment property. Considered to be one of the easiest and most valuable ways to save money at tax time, it’s simply a matter of having a Quantity Surveyor visit your home to assess the property. They will supply a Tax Depreciation Schedule, which will identify all the items in your investment property that are decreasing in value, and can be claimed as a deduction.
Repairs to your investment property is another area where deductions can be made, however you need to ensure that it’s done properly. A ‘repair’ is generally defined as ‘restoring something to a working condition’. Anything broken that is fixed, clearly falls into this category, however any items that are still functional regardless of their age that are replaced, such as an old dishwasher, cannot be claimed as a repair.
While it’s important to ensure you’re claiming everything you’re entitled to, it’s also important to ensure everything is being claimed correctly. One area where investors commonly make incorrect claims is regarding their interest payments. Make sure claims are only made on the interest of investment related bank accounts, not personal loan accounts.
Expenses that may be claimable for your investment property include:
- Tax related expenses and accounting fees
- Property management fees and commissions
- Advertising for tenants
- Body Corporate fees
- Council rates and land tax
- Depreciation and quantity surveyor fees
- Electricity, gas and water charges
- Cleaning, maintenance and repairs
- Pest control
For detailed advice on what you can and can’t claim regarding your investment property, we recommend you visit a registered accountant. Alternatively the Australian Taxation Office provides a wealth of information on their website.