Tax Time & Investment Properties – what you can and can’t claim
Many Equidel clients choose to invest in property not only for the wealth generation in the future, but also for the tax deductions they can enjoy today. But this space can be a bit of a minefield when it comes to what you can and cannot claim.
In fact, the Australian Commissioner of Taxation Chris Jordan AO revealed earlier this year that in audits of rental property claims, there are errors in as many as 9 out of 10 claims!
So below we’ll give you some tips on things you need to be keeping records for:
The things you can claim at tax time:
- Advertising for tenants
- Bank charges
- Body corporate fees and charges or strata levies
- Cleaning costs
- Council rates
- Depreciation (including some capital works)
- Electricity and gas
- Lawn mowing services
- In-house audio/video service charges
- Insurance (including building contents and public liability)
- Land tax
- Letting fees
- Pest control services
- Property agent fees and commission
- Quantity surveyors’ fees
- Secretarial and bookkeeping fees
- Security patrol fees
- Servicing costs (i.e. servicing a water heater)
- Stationery and postage costs
- Tax-related expenses
- Phone call and rental costs
- Water rates
The things you can’t claim in your tax return:
- Expenses of a capital nature or of a private nature
- Expenses related to the acquisition or disposal of the property
- Expenses that are body corporate payments to a special purpose fund to pay a particular capital expenditure
- Expenses which are not actually incurred by you, the taxpayer (i.e. water charges paid by your tenants)
Speak to your accountant
While the above list has been published in a handy infographic thanks to The Tax Institute, we would always recommend speaking to your accountant to help work out what you can and can’t claim, and ensuring that you (legally!) get the best return you can this tax time.