Taxtime helpful hints for Landlords & Domain Housing Market Report July 2013

As we embark on the beginning of 2014 financial year, it’s time for Australia’s 1.8 million property investors to get their affairs in order. If your rental property requires any repairs or maintenance work, it’s a good time to set up a plan so that you can claim the relevant deductions in this income year.

In order to maximise your deductions, the most important thing you have to do is keep good records. You don’t have to be super organised with this. Over the year, put every receipt into a box and hand it to your accountant after June 30. Pretty simple.

If you’ve lost some receipts, but you paid with a credit card or EFTPOS, the tax office will accept bank statements for individual tax payers as proof of purchase, so make sure you scour them at year’s end for any expenses you don’t have separate receipts for.

Investors really need professional advice to ensure they don’t make mistakes. In 2012, about 110,000 landlords made incorrect claims on their tax returns and the tax office has just sent letters to all of them. The ATO has their eye on property investors following a surge in deductions claims in recent years, as more investors switch to property over shares post-GFC.

Don’t muck around with the ATO. The truth is, our tax system is extremely generous in supporting property investors, so take advantage of this but don’t make bogus claims. Investors doing their own returns are bound to make mistakes – you’ll either claim for things you’re not allowed to or you’ll miss some deductions because you don’t know the ins and outs the way an accountant would.

There are so many small things you can claim for that many investors miss. The ATO has provided a comprehensive list of immediately deductible expenses – here it is.

  • Advertising for tenants
  • Bank charges
  • Normal body corporate fees
  • Cleaning costs
  • Council rates
  • Gardening and lawn mowing
  • Insurances – building, contents, public liability
  • Interest on loans
  • Land tax
  • Lease document expenses – preparation, registration, stamp duty
  • Some legal expenses
  • Pest control
  • Property agents’ fees and commissions
  • Quantity surveyors’ fees
  • Some repairs and maintenance costs
  • Bookkeeping fees
  • Servicing costs – eg service to a water heater
  • Stationery and postage
  • Telephone calls
  • Tax-related expenses
  • Travel and car expenses
  • Water charges

There are a few things not widely understood by investors. Here’s a few that stand out:

  • Payments you make to body corporate administration funds and general purpose sinking funds are considered payments for the provision of services by the body corporate and you can claim a deduction for these levies at the time you incur them. However, if the body corporate requires you to make payments to a special purpose fund to pay for a particular capital expenditure, these levies are not deductible
  • Some legal expenses incurred in producing your rental income are deductible – for example, the cost of evicting a non-paying tenant. Most legal expenses, however, are of a capital nature and therefore not deductible, eg the costs of purchasing or selling your property
  • You can claim a deduction for travel expenses, such as travelling to your property to inspect it or make a repair
  • You cannot claim the cost of buyers’ agents fees paid to any entity or person you engage to find you a suitable rental property to purchase. However, these costs may form part of the cost base of your property for capital gains purposes
  • Only the interest paid on the loan for your investment property is deductible. If you’re paying principal and interest, you cannot claim the principal portion

All the information above is general in nature. Use it as a guide only. As with most tax stuff, it’s best to get professional advice. For more information, download the ATO’s Rental Properties Guide.

Best regards,

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Removing the Hassle from Sales and Rentals across South East Queensland. Aim to Empower other like minded Property Investors. LJ Gilland Real Estate Pty Ltd LREA推荐书LJ Gilland房地产 L J Gilland Real Estate is a prestigious boutique agency specializing in Property Investment Management Services and the Sales of Investment Properties with tenants in place. Comprised of a top performing group of handpicked specialists, our Agents proudly serve Property Investors in Queensland. Since 1996 our Agency has demonstrated a genuine enjoyment of working with people, developing long-term relationships and delivering on the promise of great service. Carlos and Linda Debello offer property investor's the confidence to sell and lease in any market. We provide comprehensive market appraisals, exclusive multimedia marketing campaigns, and knowledgeable, highly personalized counsel on all aspects of real estate. Our Property Management Team is equally considerate, offering investors with in-depth advise, well-researched rental valuations, and highly professional rental management services. Carlos’ direct mobiles are 0400 833 800 & 0413560808. Linda’s mobiles are 0409995578 & 0414978700 (prefer email contact for Linda). Office 07 3263 6085.
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