The end of financial year has arrived and it’s time to make sure you have all of your documentation in order so you can reap some of the tax time benefits that come with owning an investment property.
As a landlord, you may be able to claim a number of tax deductions for your property. Below is a list of the items that are able to be claimed. However, every property investor will have a different circumstance, and it is vital that you consult your accountant to find out which (if any) apply to you:
- Mortgage interest – Please note that you can only claim the interest on a loan that is specifically taken out to purchase or renovate the rental property;
- Council rates and water rates;
- Any cleaning of the investment property. For instance, professional carpet cleaning after tenants have moved out, prior to new tenants moving in;
- Any loan establishment fees that you have paid to your bank/lender to set-up the original loan to purchase the property;
- Any body corporate or strata fees (these are usually applicable for townhouses and units purchased);
- Any property management fees paid to a real estate agent to manage the property;
- Any advertising cost paid to get tenants to your investment property;
- The cost of travelling to inspect, undertake maintenance and repairs or improvements to the investment property;
- Any repairs made to the property, fixtures or plants, such as bathroom fittings, lighting, stove carpets and blinds, etc.;
- Any land tax (if applicable);
- Any insurance for the investment property, including building, contents and landlords insurance policies;
- Any cost paid for pest control;
- Maintenance, for instance such as looking after gardens, lawn mowing and pool maintenances;
- Any replacement of ‘capital’ items, such as dishwashers, bathroom fittings, pool pumps, carpets, stoves and hot water heaters, etc.; and
- Any stationery items, postage costs, telephone calls and Internet access related to the investment property, collecting rent or undertaking maintenance and improvements (FLR Solutions, 2012).
A good tip to follow is to pre-pay for expenses before June 30th; this is so you can claim those expenses as a tax deduction in the 2012 financial year. Engage the help of experts when completing a tax return and ensure that you always keep receipts for all purchases related to your investment property so you can confirm with your accountant whether or not it is claimable.