It was recently reported that rental property deductions have surged in recent years as investors prefer bricks and mortar to shares as the preferred investment strategy. The Australian Taxation Office (ATO) is now targeting more than 110,000 rental property owners who were identified through last year’s tax returns as making incorrect claims on their investment properties.
Ensure that you lodge your tax return correctly with the following tips:
What rental expenses can be claimed for an immediate deduction?
You are able to claim a deduction for some of the expenses you incur for the period your property is rented or is available for rent. You can claim a deduction for these expenses only if you actually incur them and they are not paid by the tenant. This includes:
• advertising for tenants
• bank charges
• body corporate fees and charges
• cleaning
• council rates
• electricity and gas
• gardening and lawn mowing
• in-house audio/video service charges
• insurance (building, contents, public liability)
• interest on loans
• land tax
• lease document expenses (preparation, Registration, stamp duty)
• legal expenses (excluding acquisition costs and borrowing costs)
• mortgage discharge expenses
• pest control
• property agents fees and commissions
• quantity surveyor’s fees
• secretarial and bookkeeping fees
• security patrol fees
• servicing costs, for example, servicing a water heater
• stationery and postage
• telephone calls and rental
• tax-related expenses
• travel and car expenses (rent collection, inspection of property, maintenance of property)
• water charges.
What rental expenses can’t be claimed?
• acquisition and disposal costs of the property
• expenses not actually incurred by you, such as water or electricity charges borne by your tenants
• expenses that are not related to the rental of a property, such as expenses connected to your own use of a holiday home that you rent out for part of the year.
What records need to be kept?
Records of rental expenses must be in English, or be readily translatable into English, and include the:
• name of the supplier
• amount of the expense
• nature of the goods or services
• date the expense was incurred
• date of the document.
Always keep a copy of all receipts – as some receipts are now printed on thermal paper and can fade over time.
Property Investment can be a rewarding experience. With the right advice you can ensure that your investment is working hard to bring you the maximum returns that you are eligible for. To ensure that you are compliant with your rental property claims in your tax return, seek professional advice. Here at The Quinn Group, our team of experienced Tax Accountants and Lawyers can assist you with on getting the most out of your investment property and legally minimising your tax obligation by submitting an online enquiry or calling us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment.
