According to the ATO there are around 1.8 million property investors in Australia and 2.7 million rental investment properties. Surprisingly, many landlords fail to claim all allowable tax deductions simply because they are unaware of all the expenses they can claim as a tax deduction.
There are two types of investment property strategies – positively geared or negatively geared….
The strategy most suited to you will be dependent on your individual circumstances and your long term investment goals and objectives. More recently, proposed tax changes to negative gearing has been a political hot potato. Let’s face it – nobody likes the goal posts shifted half way through the match! Whatever the outcome, property investment is likely to continue being a popular path to wealth creation for Australians.
So… If YOU have an investment property are you sure you are claiming all possible deductions?
Regardless of the property investment strategy you adopt all investors will see benefits in claiming all possible deductions. As a starting point review the lists below and ensure you have paperwork for the expenses you have incurred:
Initial borrowing expenses
Interest is usually the largest tax deduction, particularly in a negative gearing arrangement. You can claim the interest charged on the loan used to:
You may be able to claim a deduction (usually at the rate of 2.5% per year in the 40 years following construction) for the construction cost of:
The plant and appliances in your property reduce in value over time as a result of normal wear and tear. The ATO allows you to claim deductions for this reduction in value each year. There have been recent changes for properties purchased after 9 May 2017. Check with your taxation specialist.
In order to substantiate these deductions you should consider a professional quantity surveyor’s report for applicable capital works and depreciation deductions during the life of your property.
Most importantly… make sure you keep all receipts as no receipt = no deduction.
The above checklist should get you started….
For more information…call us on 8004 2222 or contact us and ask us to send you the ATO ‘Guide for rental property owners – Rental properties 2017’.
This explains how to treat rental income and expenses for more than 230 residential rental property items!