Tax Deductions for Rental Property Owners in Australia

1. Top Tax Deductions for Rental Property Owners in Australia Top Tax Deductions for Rental Property Owners in Australia Many Australians find it attractive to invest in property. The reason is simple, the tax deductions for rental property owners make investment in property lucrative. Not only it helps with capital appreciation but they can also get a big slice of their tax back as a refund when they lodge their investment property tax return. So what are the main deductions that no rental property investor should miss out on?

2. Here are some of the main tips on these deductions from our property tax advisors: 1. Interest on mortgage Interest you pay on loan or mortgage to buy the investment property is deductible in full. This is the biggest deduction for investment property and the tax saving due to this deduction effectively subsidies your mortgage interest. Interest paid in advance for the next financial year is also be deductible on tax. It is a good year end tax planning strategy. And the good news is that if you are constructing new property to rent, you don’t need to wait until renting it out to start claiming this deduction. You can begin to claim it straight away and negative gear this loss against your salary income and save tax. 2. Depreciation Depreciation is not only the second largest rental property deduction, it is a non-cash deduction. You get to write off your capital expense on property and recoup a good part if it back on tax. It helps to use an ATO approved quantity surveyor to get the tax depreciation report done professionally. This may cost you $400 (tax deductible) but will likely get is back in the first year’s tax refund itself. 3. Repairs & Maintenance Any work to remedy the defects in the rental property is also tax deductible. So expenses like repairing the aircons, lawn maintenance, plumbing work etc. can be claims on tax. 4. Property Agents’ Fee Investors often use a property manager to find tenants and manage the admin related to the property. Fee paid to your real estate agent for these services or advertises for a tenant is a deductible tax expense.

3. Your agent should provide you with a yearly statement based on which you can claim the deductions. 5. Legal and Professional Services Any fees paid to accountants, lawyers, real estate agents, investment advisors and other professionals in connection with your investment property can all be deducted in the year incurred. However, they must relate to earning your rental income. Any fee incurred for purchase or sale of your property is a capital expense. 6. Strata Fees You may incur strata fees if your investment property is a unit, apartment or townhouse. These fees however, are deductible as soon as they’re incurred. 7. Property Rates and Taxes Any local council rates, water rates and land taxes incurred for your investment property is immediately deductible. 8. Bank fees & borrowing costs Expenses relating to loan like establishment fees, title search fees and costs for preparing and filing mortgage documents are deductible over 5 years. You can also deduct any bank fees or charges related to property investment bank accounts. 9. Insurance Off course, you will be insuring you investment and you should. You can deduct the premiums you pay for almost any insurance for your rental properties like home owner insurance, home and contents insurance and landlord liability insurance. With the right tax tips and deductions, you easily can maximise the tax refund on your

4. investment property tax return. It’s a good tax strategy to have but one that you should seek advice from property tax experts before to make an offer to buy a property.