As we head toward the end of the financial year, thoughts turn toward our taxes. Over the past couple of years, there have been changes to the rules around property investment and rentals due to government regulations during the COVID pandemic. Now is a good time to assess what is required of property investors to keep the tax man happy and maximise your returns.
If you own an investment property that is rented, you must declare all income derived from the property to the Australian Taxation Office (ATO).
Declarable income includes:
- Rental bond returns when a tenant damages a property
- Insurance payouts even after a disaster
- Disaster relief funds
- Booking fees
- Anything paid by a tenant toward the cost of any repairs or maintenance
- Lump sum rent payments.
When it comes to the expenses that you can claim, it is essential to be organised. This means keeping all invoices, receipts and bank statements in relation to property expenditure and even rental listings so you can prove it was available for rent during the taxation period.
Expenses you can claim include:
- Real estate and letting agents’ fees
- Advertising and marketing fees for leasing
- Lawn and garden maintenance
- End of lease cleaning and rubbish removal
- Pest control
- General maintenance on property facilities including hot water systems, air conditioning, smoke alarms, garage door systems, solar power repairs
- Getting new keys cut
- Security systems and patrols
- Water supply charges that aren’t covered by tenant usage
- Insurance – building, contents, public liability
- Council rates and land tax
- Quantity surveyor
- Body corporate fees and charges
- Loan interest expenses and fees
- Depreciation
- Bookkeeping fees in relation to the property
- Bank charges in relation to the property account
- Credit checks
- Debt collector fees for rental arrears collection
- Legal expenses in relation to non-payment of rent
- Tax advice in relation to the property
- Solicitor fees for holding title documents
- Home phone, computer, internet and mobile as they relate to managing the rental of the property.
Expenses you can’t claim:
- Anything related to the family home
- Expenses someone else has paid such as electricity bills paid by the tenant
- Deductions for properties that are not genuinely for rent
- Property purchase costs such as stamp duty
- Renovation costs for newly purchased properties – these costs can be claimed over a number of years, but are not claimable immediately.
More information
For more information on rental expense claims and positive and negative gearing, visit the ATO’s website. All information contained in this article is a guide only. Please consult your professional tax advisor on your property investment deductions.
If you’re feeling a little lost with managing your investment property, talk to our Property Management Team today. The Walkom Real Estate property management promise to all our landlords is the provision of a total, stress-free property management service that achieves the highest rental and occupancy rates with superior quality customer service and communication to landlords and tenants.