Claiming Tax Deductions On Your Investment Property
Updated: Mar 9
Investing in property has so many benefits for real estate investors. One of the biggest benefits of real estate investing are the rental property tax deductions. Generally, investors can claim their yearly deductions based on the taxable income for expenses related to the maintenance and management of their property. If you own a rental property or you're looking to invest in a rental property, here are a few of the major investment property tax deductions to consider for your next tax claim. Claiming these expenses may put more money back into your pocket.
Before making the decision to invest in a rental property, it's very important to know the basics when claiming your rental property tax deductions. Firstly, you need know that your income is the rent you earn on your property and it must be declared on your annual tax return. Your expenses are the (mostly) tax deductible costs that you incur for operating that property for tenants. Investors can only claim deductions on their property during the periods that it has been occupied by rental tenants. These deductions can only be claimed if the expenses were incurred by the property owner and NOT the tenant.
Claimable Investment Property Tax Deductions
We have created a list of deductions that you can claim on your rental property:
Advertising - the costs incurred when advertising for a tenant
Strata Fees and Charges - generally relevant when you own a unit, apartment or townhouse and are required to pay the body corporate
Insurance and Income Protection Insurance
Rates - water and council rates are rental property tax deductions that you are entitled to claim
Gardening and Lawn Maintenance
Other Cleaning and Pest Maintenance Expenses
Interest Expenses - relating to the loan that is taken on purchasing a property
Possible Legal Costs - such as the costs involved in evicting a tenant, expenses from court action for loss of rental income and/ or defending a damages claim from injuries incurred from a third party on your investment property
Repairs and Maintenance - relating to the wear and tear of your property
Pre-Paid Expenses - those providing services extending beyond current year's income
Property Agent Fee's and Commissions
Investment Property Depreciation - if your property was built after September 1987 you may be eligible to claim depreciation on your rental property. The Australian Taxation Office (ATO) considers the fact that assets decrease in value over time. Claiming depreciation on rental properties can be done through the ATO under two categories (capital works and plant and equipment assets). Capital works deductions relate to wear and tear on fixed items in your investment property. Plant and equipment assets are the easily removable fixtures.
Are you Interested in Purchasing an Investment Property?
Here at REIF we have a team of finance and property specialists who are helping investors across the country to create their financial wealth and build a property portfolio. We have access to over 10,000 properties across Australia. If you are interested in investing in property, please reach out to our team today.
Our contact details are listed below:
Ph: 1300 130 932