With the end of financial year (EOFY) right around the corner, now is the time to start making a list of deductions that you should be considering in regards to your investment properties. We compiled a list of 10 potential deductions to help you get started.
1. Loan Interest: Often overlooked, it is important to remember that interest accrued on an investment loan is tax deductible. Also, bank fees that are associated in servicing this loan can also be written off.
2. Rental Advertising: Anytime you are advertising for new tenants, fees associated with whichever form of advertising you chose (Ie. flyers, newspaper ads, online) can be claimed against rental income at the end of the financial year you paid them.
3. Strata Fees: Body corporate fees are deductible if your investment property is managed by strata (in most cases). This includes payments made on things like gardening, garbage collection and upkeep of amenities.
4. Land Tax:This tax is state based and therefore, is not universal for all investment properties. However, check to see what rules and tax specifications apply to the state your investment is in and deduct accordingly.
5. Building depreciation: When it comes to building depreciation, you are allowed to claim 2.5 % per year on your investment property. This deduction can be done for up to 40 years on new builds and relatively new properties.
6. Repairs and Maintenance: Direct wear and tear on the property that requires fixing can be deducted so long as criteria is met. This criteria, like most involving investment properties, is directly related to when the property was purchased or, if it is involving appliances, their specific timelines.
7. Insurance: Insuring your investment property is another expense that can be claimed at tax time. Be sure to check your statements to see what your current premiums are.
8. Travel Costs: This one is a bit tricky as recent changes have affected this write-off. Whereas it used to be that any travel to and from your investment property were tax deductible, today, there are some specifications. Be sure to check on the latest rules and regulations and confer with your accountant.
9. Bookkeeping Costs: Much like fees related to filing your personal income tax, the costs related to bookkeeping for your investment property are also deductible. Be sure to separate the two however.
10. Agent Fees: Fees that are paid to agents for maintenance, showings or other miscellaneous purposes are usually tax deductible. Ask your agents for a breakdown of fees you have paid to them and check with your accountant to see exactly which ones you can claim.
Remember to check ATO regulations and/or with a registered tax professional as this list acts strictly as a guideline. There are several more items that can be looked at in terms of potential deduction possibilities. It is important to try and stay organized with all of your investment property related documents, creating a seamless process come EOFY.