There are several ways to reduce your tax bill when it comes to your investment property portfolio.
The Australian Taxation Office (ATO) requires all landlords to keep records of the date and cost of purchasing the property; any rental income to report with your annual tax return; and any expenses you’re claiming in relation to the property.
So, what can you claim on your tax return? Here at the top 10 things you can claim as a property investor.
- Rental advertising costs. If you use online, print media, brochures, or signs to advertise your property to find a tenant, you can claim it against your income in the same year you paid for it.
- Loan interest. Investors can claim the interest charged on a loan for an investment property and any bank fees for servicing that loan.
- Council rates. But you can only claim them during periods in which the property had a tenant.
- Strata fees. If your property is on a strata title, you can claim those costs back.
- Repairs and maintenance. You can claim repairs if they relate directly to the wear and tear of the property.
- Insurance. You can claim the cost of insuring a rental property.
- Bookkeeping/accounting. If you have an accountant, you can claim the costs of advice, preparation of tax returns and expenses incurred for managing your rental accounts in the same year. You cannot claim a deduction against your rental property for the cost of preparing your personal tax return.
- Agent’s fees. Fees or commissions paid to real estate agents who collect rent, find tenants, and maintain your rental property are tax deductible.
- Legal expenses. If you’re going to court over unpaid rent, you can claim the costs of legal advice and documents.
- Negative gearing. If the rental income on your property is less than your interest payments and expenses for the year, then your property is negatively geared. It’s one of the best ways you can reduce income tax on your rental property. Although you can’t gain any tax deductions directly through negatively gearing your investment property, you’re able to reduce your taxable income, which indirectly reduces the amount of tax you pay.
Having the right people to help you with your investment property can be invaluable. This could include an accountant, a property manager, and a property lawyer.
Here at GLG Legal Springfield, our commercial and property law experts are here to help you get the best return on your investment. Contact our office at (07) 3288 3511 today to make an appointment.