Are you claiming all your Rental Property tax deductions?
If you own an investment property it’s important to know which expenses to claim as rental property tax deductions.
However, the expenses you can claim as rental property tax deductions can vary depending on your circumstances:
Is the property rented or available for rent? If it’s not, you can’t claim expenses. In some cases, expenses must be claimed over a number of years but in others, the expense cannot be claimed until the property is re-sold.
Avoid ATO troubles down the track. It’s important that you know you’re claiming the right rental property expenses and claiming them the right way!
Here are a couple of mistakes that people often make!
- Maintenance and repairs done before leasing a property for the first time can be claimed as a tax deduction.
- The cost of renovations on an investment property can be claimed in full on the next tax return.
- Maintenance and repairs done on an investment property prior to it being leased CANNOT be claimed as a tax deduction.
- Renovation costs can be claimed as a tax deduction, but only at a rate of 2.5% a year over 40 years.
Changes to rental property tax deductions
Restrictions on what rental property investors can and can’t claim as a tax deductions began a few years ago:
- Travel expenses: Rental property investors can no longer claim tax deductions for travel expenses related to an investment property.
- Depreciation: Investors can only claim depreciation on capital items – dishwashers, ceiling fans etc. – if they personally purchased the item. Depreciation can no longer be claimed on an item purchased by a previous owner.
Tax and rental properties is complicated, so discuss rental property tax deductions with a tax agent, like Etax Local. A tax agent will be able to advise you on many aspects of your investment future and make sure you:
- Clearly understand your options and the investment tax deductions you can and can’t claim.
- Know when and how you can claim the deductions you are entitled to.
- Help you with a strategy to help you manage future investment properties.
In the meantime, we’ve put together this simple infographic to help get you on the right path:
Please Note: These tips are of general nature only. Speak to a qualified tax agent for specific advice suited to your personal circumstances.