Confused About Investment Property Tax Deductions?

There is a lot of confusion among rental property owners about their investment property tax deductions. I will try and clear up some of the confusion in this short and sweet blog post.

Accountants and Investment Property Tax Deductions

Most accountants are happy to help you with the compliance issues surrounding your rental property. They will probably give you a list of things you can or can’t or should not claim against you rental income. For this service they will usually charge you a handsome fee and then tell you off for not keeping good records and send you on your way. But according to the tax office, most rental property owners ignore their accountant’s advice by not keeping good records and supplying ambiguous information. If this is you, you are setting yourself up for a financial catastrophe of monumental proportions.

What to do

Keep good records and understand your obligations. That’s it, nothing else, you bought a property, you rent it, so you are in the business of renting out property. Business’s have to keep good records to survive and comply with the tax collector, period.

Common Investment Property Tax Deductions

• Advertising for Tenants
• Body Corporate Fees
• Borrowing Expenses
• Capital Works and Structural Improvements
• Cleaning
• Commissions & Management Fees
• Depreciation of Plant & Fittings
• Electricity/Gas
• Gardening & Yard Work
• Insurance
• Interest
• Land Tax
• Lease Expense
• Legal Expenses
• Management Fees paid to agent
• Stationery
• Pest Control
• Rates
• Repairs
• Repairs at the end of the tenancy
• Telephone Expenses
• Travel

These are the common deductions, but keep all expenditure receipts as you accountant will know what is deductible and how it is deductible. For more information the Australian Tax Office has some very good publications that detail everything about tax deductions and compliance issues for rental property owners. It is easyier to work within the rules, so your wealth accumulating activities are not derailed by a very big and sometimes angry public authority like the tax office. It is bad enough that you have to put up with interest rate fluctuations.