Make the most of tax time by claiming these 5 tax deductions on your investment property.
Many property investors miss out on extra tax deductions by overlooking these simple claims at tax time. The ATO allows you to claim on repairs, loan fees, depreciation, travel to visit property and interest expenses. Even if you don’t directly manage your tax return, it’s worthwhile to be aware of the extra claims available so that you can bring them to the attention of your accountant.
1. Purchasing Fees
You may be able claim a deduction for the cost of any fees that it takes to secure your mortgage. This may include; any loan establishment fees, title search fees, costs of mortgage documents, broker fees, stamp duty and if your lender has any requirements such as mortgage insurance or property valuations.
2. Interest Expenses
You may be eligible to claim tax deductions on the interest you pay for your investment property, provided that the whole loan amount is solely for the property and not any additional private purchases (i.e. if you increase your loan amount to purchase a car, this will not be covered.) The deductions can only be made if the property is rented in this period or is available to rent and not if it is being utilised for personal use.
3. Depreciation Schedule
A Depreciation schedule considers the reduction in value of an asset over time, usually related to general wear and tear. The property must have been built after July 1985 in order to claim depreciation, however if construction commenced prior to this date you may be able to claim the deduction on plant and equipment.
4. Maintenance & Repairs
Maintenance and repair costs may be considered as a tax deduction provided that it relates to wear and tear or damage as direct result of renting the property. Maintenance is anything related to either preventing or fixing the deterioration of the premises. It’s important to note that initial repairs completed shortly after the property has been purchased are typically not tax deductible.
5. Travel Expenses
In some instances, the cost of travel to inspect, repair or collect rent from your property may be claimed. The trip must be stand alone, solely dedicated to visiting the property and not part of a larger trip (i.e. stopping by the rental property on the way to work). It’s important to ensure you maintain a log book to track the kilometres you’ve driven in relation to your property in order to claim the cent per kilometre deduction.
If your travel involves flights and accommodation, this may be claimed depending on your length of stay and if the sole purpose of your trip is to inspect your rental property.
For a full list of rental property expenses and what you can claim visit the ATO’s website here.