Property Investing and Tax Time

We are almost at the end of financial year again and it is time to start reviewing our tax depreciation against our investment properties.

Repairs

When repairing your investment property you needed to be careful that you are not over capitalising and making home improvements on your property as you could be stung. Repairs are a tax deduction; improvements are considered as capital and not considered to be tax deductible.

How can you determine what is a repair and what is an improvement – simple is you are bring the item back to its original state it is a repair, however be careful that you aren’t improving something beyond its original state as that can be then considered as capital.

When you need to replace an item in your investment property you don’t need to worry that you are going to lose out by spending money. Capital expenses can also still have tax perks, even if they aren’t deductible.

Building Allowances

As a landlord you can claim annual building allowances of 2.5% to 4% on structural improvements. A quantity surveyor can help you with the tricky and grey areas such as capital expenses to ensure that you are not losing money on expenses.

Real Estate Agent Fees

Your property is being rented and you are paying a managing fee to an agent. These fees are all part of the taxable income on your investment property. So long as the property has been rented for the year the fees will be a deductable part of your income against your investment property.

There are many areas to consider when owning an investment property and these include GST, travel expenses, body corporate fees, borrowing costs and legal fees.