Minimising tax on your investment properties

Conveyancing and property law

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What Are the Key Tax Benefits of Investment Properties?

There are several ways to reduce your tax bill when it comes to your investment property portfolio.

We’ve covered a number of these in an earlier blog post but let’s take a deeper look at how you can offset your other income through an investment property.

 

How to Offset Your Income Through Investment Property Deductions

Firstly, one of the tax benefits of an investment property is interest – you can claim interest charged for loans as a tax deduction, when the account is used for investing. 

Secondly, rental expenses. You can claim all kinds of expenses to offset the amount of tax you pay each year when you own rental properties, including:

  • Advertising for tenants
  • Body corporate fees and charges
  • Council and water rates
  • Land taxes
  • Cleaning
  • Gardening
  • Pest control
  • Insurance
  • Property agent fees and commissions
  • Property repairs and maintenance

You can also claim the depreciation of the building. This is a tax deduction is that calculated and claimed on your tax return, if the investment property was constructed after 1985.

Another way to offset income is to claim depreciation of fittings inside your investment property, which can include carpets, appliances, air-conditioning and window dressing such as curtains and blinds.

How Loan Costs Can Save You Thousands in Tax Deductions

The cost of your loans can also be claimed for investment properties and can add up to thousands in deductions each year. 

Don’t forget to claim your accounting costs as well. This includes fees for lodging your tax return and activity statements, travel to obtain tax advice from a professional tax adviser, and you can also claim costs for any valuations you need to obtain for certain tax deductions, such as qualified building surveying reports for depreciation claims.

When it comes time to sell an investment property, you can reduce your capital gain by 50 per cent, if you have owned the property for at least 12 months, and you are an Australian resident for tax purposes.

Capital Gains Tax (CGT) Discount: What You Need to Know

This is called the capital gains tax (CGT) discount. According to the Australian Taxation Office, for an asset to qualify for the CGT discount you must own it for at least 12 months before the ‘CGT event’ happens. The CGT event is the point at which you make a capital gain or loss.

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, our commercial and property law experts are here to help you get the best return on your investment. Contact our office today on (07) 3288 3511 or email: info@springfieldlegals.com.au to make an appointment.