- Always remember to keep your records.
Make sure you have the supporting documents of your income and expenses if you wish to claim everything you are entitled to.
- Claim your repairs and maintenance expenses right
- Repairs that relate directly to damages that happened as a result of you renting out the property can be claimed in full in the same income year when you incurred the expense. Be aware that the initial repairs that already existed when you have purchased the property are not immediately deductible. Instead, the initial repair expenses are deductible on your profit when you sell the property.
- Replacing a damaged item that is more than $300 and is detachable from the property must be depreciated over number of years.
- Improvement of the property, such as replacing or renovating an entire structure are not immediately deductible. These are building costs that can be claimed at 2.5% each year for 40 years from the date of completion.
- Claim your borrowing expenses
Borrowing expenses include loan establishment fees, title search fees, and costs of preparing and filling mortgage documents.
If your borrowing expenses are:
- Less than or equal to $100, you can claim the full amount in the same income year that you incurred your expenses.
- More than $100, the deduction is divided into 5 years.
- Claim your interest loan
The part of the Interest on your rental property loan can be claimed as a deduction, only in the condition of when the interest is related to the rental property. Interest on any other personal use of some of the loan money cannot be claimed on that part of loan.
- Claim your construction costs right
Certain building costs, such as extensions, alterations and structural improvements can be claimed as capital work deduction at 2.5% of the construction cost for 40 years from the date the construction was completed.
Be aware that the previous owners are required to provide you the information they used to calculate the costs if they claimed a capital works deduction.
- Claim your expenses in the right portion
If you rent your property to family and friends below market rate, expenses can only be claimed as a deduction for that period up to the amount of rent you received.
You cannot claim your expenses when your family or friends stay at your property free of charge, or for the period of personal use of the property.
- Claim your property manager’s fees
If you use a property manager, fees such as property agent fees and commission can be claimed as deductible expenses. In general, an organised property manager will provide you the relevant paperwork for ATO reporting.
- Claim your offsetting costs
If you manage your investment property yourself, some expenses may be able to claim, such as:
- Utilities including electricity, gas and water bills
- Office stationery
- Telephone and internet costs
*Source from ATO.
Our professional accountants are here to help you to identify expenses that you can claim and can’t claim. Please do contact us at 0481309696 or admin@simprotax.com.au for any enquiries or to book an appointment with us for consultation.