Bathurst Blog

Here are some key areas for you to understand that will help you with your claims during tax time.

Agent Fees

The good news is that a good property manager can help to keep track of your expenditure over your property and a great accountant will help with identifying and maximising the deductions that you can claim on your investment.

Some of the areas that your accountant may talk to you about considering when putting through your return.

The professional fees that are charged by your Property Manager is one item that can usually be claimed. They may include fees such as the management and administration fees, marketing costs with finding a new tenant, letting fees, commissions, postage and petties, statement fees, lease document expenses, and bank fees that may be included with the daily management of your investment. 

Rates & Levies

During the time that the property is rented, you may be able to claim for the payment of council and water rate usage on the property as well as the strata levies that are incurred if your property is subject to a strata title and management. Strata fees for the management of a strata plan may also be included as part of this claim. First-time homeowners can claim tax deductions if they lodge an initial tax return with the Office of State Revenue, in their respective state or territory.

Repairs and Maintenance

Over the course of the life of a property, items will be subject to wear and tear and break down or need replacing over time. Your accountant can usually discuss claiming any costs or depreciation for the items that are repaired or maintained over the course of a tenancy. 

Some of these items (that maintains the property but does not improve it) might include repairing or replacing items such as dishwashers, appliances, electrical or plumbing repairs, pest control, gutter cleaning, handyman fees, building maintenance or everyday maintenance like pool servicing and lawns and garden care.

The ATO may be vigilant on claiming maintenance expenses when they are in fact improvements to your property. Fixing a glass window is considered as a repair but replacing the whole window frame is an improvement. Something to always keep in mind at tax time. 

Taxes and Interest

A good accountant will also discuss the option of claiming interest and land tax costs for the time that a property is tenanted, if you are eligible and calculate these deductions to put through with your claim at tax time. Interest can be the most significant property tax deduction that you can claim. Safe to say you can claim something back from a loan taken out from your bank for your benefit.

Depreciation

Investing in a professional tax depreciation report will assist at tax time with identifying the potential for depreciable items at the property based on its current age. Your accountant can then claim any potential depreciation that has occurred on the property and maximise the return that you can receive. General wear and tear of your investment property can be claimed as a non cash property tax deduction to offset against your income. These include plant and equipment assets (over their effective life) and capital works (construction costs), up to 40 years. 

Professional Fees

Employing professional services like accountants and solicitors in the management of your property for specialised needs is an essential part of investment property ownership. Claiming the costs for these services should also be discussed with your accountant to include at tax time as well as any property insurances that are held over the investment. Make sure to keep a record each time you incur costs from a professional for help to make things easier for you and your accountant during the tax period. 

Heading into tax time can seem a daunting prospect with understanding what you can and can’t claim on your investment property, but understanding these key areas will help put more money back into your pocket!