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Tax Tips for Your Investment Property

As we get closer to the end of the financial year, investment property owners will be looking to maximise their returns. The following tips will help with getting landlords ready for tax time.

Get all your receipts together

Whether you keep all the physical receipts in a safe location, or keep digital copies on a secure server, it pays to have these readily available at tax time. Maintaining records and receipts for your purchases should be a year-round affair, but keeping on top of this can be difficult. Many contractors, tradespeople and vendors will provide a digital receipt, so finding missing receipts could be as simple as looking through your emails.

Know what you can claim

Certain borrowing expenses can be claimed back. These include lender’s mortgage insurance costs, title searches, mortgage preparation fees, broker fees, valuation fees and stamp duty.

Landlords are also able to claim their property management costs. These include advertising to attract a tenant, land rates, and accounting agent fees. A claim can also be made for any body corporate fees if your property is an apartment or unit.

Maintenance and repair costs

Property repairs and maintenance are another key area where claims can be made. Examples of repairs include replacing broken windows, doors, air conditioning units and tap fittings. Maintenance costs will normally include basic landscaping, professional cleaning, an annual pest control report and painting.

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Update or obtain a depreciation report

If you owned your rental property prior to May 2017 you can claim for depreciating assets. If your property was purchased after that, you are only allowed to claim on brand new assets. These assets include appliances, curtains and air conditioners. Either way, if you’re spending money on updating the property, it would pay to get an updated depreciation report.

What you can’t claim

Utilities that are paid by your tenants, as well as travelling to your property for inspections, rent collection or maintenance. This is a recent change from the ATO, coming into effect in the 2017/18 financial year, so property owners need to be mindful of this. Any personal use of the property needs to be taken into account too, as you can’t claim expenses for the time you used it yourself. An example of this would be if you owned a holiday house and you stayed there with your family.

By keeping these tips in mind, you will not only maximise your return, but also make the accounting process a lot easier for all involved.

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