Tax time may be a few months off, but it pays to be organised – and by getting your ducks in a row now, you can save yourself a giant headache come tax time.
Also, if you know exactly what you can claim, you can actually start enjoying the savings in your pay packet each week, rather than waiting til End of Financial Year.
For instance, if you know that your property-related tax deductions amount to $6,000, that equates to a tax refund of $1,890, if you pay tax on a standard 31.5% tax bracket (annual income of $30-$80,000).
That’s $36 per week you could have deposited into your account as part of your regular salary, instead of waiting to receive it as a lump sum when you file your tax return. To investigate this option, get in touch with your payroll officer so you can fill out the appropriate forms.
In the meantime, Tracey Collins, director of Personal Tax Specialists in Ulladulla, outlines the tax deductions you may be able to claim as a property investor.
As a landlord, you may be able to claim the cost of:
- Advertising for tenants
- Property management fees paid to a real estate agent to manage the property
- Bank fees paid on the account you deposit the rent into and pay expenses out of, and also on any bank loans used to finance the purchase of the property
- Body corporate or strata fees (usually only applicable for units or townhouses)
- Loan establishment fees paid to your bank to set-up the original loan to purchase the property
- Cleaning the property, such as professional cleaning carpets after the tenant has vacated the property
- Pest control
- Council rates and water rates
- Maintenance, such as looking after the gardens and pool
- Insurance, including building, contents and landlords insurance policies
- Mortgage interest. Note that you can only claim interest on a loan that is specifically taken out to purchase or renovate the rental property
- Land Tax, if applicable
- Repairs made to the property, fixtures or plant, such as bathroom fittings, stoves, lighting, carpets and blinds
- Replacing “capital” items such as stoves, dishwashers, bathroom fittings, pool pumps, carpets and hot water heaters
- The cost of travelling to inspect, undertake maintenance and repairs or improvements to the property
- Stationery, postage, telephone calls and internet access related to the property, collecting rent or undertaking maintenance and improvements
“We suggest that you keep receipts for all purchases that relate to your investment property, even if they’re not on this list,” Collins advises.
“That way, when your accountant prepares your tax return, they can decide whether you are allowed to claim a tax deduction for them or not.”