Five basic tax write offs all property investors should be including
Want to keep more of your money in your own bank account? Of course you do.
As a property investor, there are plenty of things you can claim against your taxable income. Understanding tax deductions can help you get the highest tax refund you're entitled to.
Here are five big ticket items you can claim now to save you serious money.
1. Interest on your loan
You can claim the interest on the mortgage that you took out over your investment property, plus any additional bank fees. On a $500,000 loan that could be as much as $20,000 you can deduct from your taxable income.
To claim, the loan must be solely for the investment property. If you refinance against the equity and take out an extra $25,000 to buy a new car, you can't claim the interest payments on that portion of your loan.
2. Council rates
You can claim council rate payments for your investment property for the period in which it was rented out. If it was an investment property for the whole year, you can claim the full amount. If you lived in it for six months and then rented it out, you can only claim 50%.
3. Property management fees
Not only does your property manager help you get more value out of your investment portfolio, you can claim their fees back on tax. If they're charging 10% on a $400/week rental, that's another $2080 you can take off your taxable income. Considering that they help you get a great tenant, handle all the communication for you and arrange repairs and maintenance to keep your home humming, that's a pretty good deal!
4. Strata fees
Strata properties come with strata fees that cover the cost of maintaining the common property and keeping up building insurance as well as the professional fees of your strata manager. These can add up to a tidy sum, which can be deducted from your income at the end of the year.
Some strata fees also include gardeners and cleaning services. These are still claimable, but make sure you don't double dip by also claiming them separately.
5. Repairs and maintenance
Leaking tap? Damaged fence? Every home needs a little fixing up from time to time. One of the more valuable services a property manager offers is to take care of those things for you. They maintain relationships with tradespeople who they can call out on your behalf. They'll also look out for wear and tear so they can fix problems before they arise.
If you have to do repairs to your investment property, you can claim the cost of the tradesperson and materials against your income. You can also claim for standard maintenance costs, like repainting a faded wall or oiling a deck.
Some repairs, like a new carpet or oven, are deemed to be capital improvements. Check with your accountant if you're not sure which category something falls into.
To get the most from your investment property, consider hiring a good property manager. They'll communicate with tenants on your behalf, organise maintenance and offer advice on how to improve your property's value. Find out more about our services.
For actionable advice that’s fully tax deductible, get in touch with us today.
*Independent is not a financial advisor. The information contained is for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before making any commitment of a legal or financial nature you should consider the appropriateness of the information having regard to your circumstances and needs and seek advice from a legal practitioner or financial or investment adviser.
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