Rental Property Tax Deductions
Rental property expenses are any expense related to income earned from the property, these will be assessed by the ATO for rental property tax deductions.
As a guide, we’ve compiled a list of general expenses that may be eligible to be included in your tax return.
Rental Property Tax Deductions – Tenants, Property, Fiscal Matters
- Advertising for tenants (If you are using an agent, this will generally be deducted with the first months rent)
- Property maintenance fees – The property managers roles in your investment is to set the initial rent level, find and evaluate prospective tenants, collection and distribution of rent, rental inspections, condition reports when entering and vacating the premises, handle tenant queries, deal with maintenance issues, tribunal processes and eviction if necessary.
- Bank fees on investment loan and/or the account the rent is paid into
- Body corporate or Strata fees – These are usually for a unit, flat or townhouse and cover general administration, maintenance, insurance etc. Each owner is allocated their share. Annual budgets and maintenance plans are prepared by the owners corporation and annual general meetings are held
- Loan establishment fees (fees for set up of original loan or refinancing)
- Interest on investment loan
Rental Property Tax Deductions – Property Maintenance, Rates, Insurance and other expenses
- Cleaning of premises once tenant vacated
- Council rates
- Garden and Pool maintenance – These expenses are covered by the rent and are generally added to the cost of rent (paid by the tenant) and tax deductable for the owner. A lot of landlords find that they have peace of mind when being in control of the garden and pool maintenance, knowing that their property will always look its best and negate the risk of tenants failing to do so.
- House and contents insurance – depending on your level of insurance cover, contents insurance covers floor coverings, window furnishings, appliances, light fittings and fully furnished properties, to name a few
- Landlord insurance – An insurance that covers the landlord for financial losses related to the investment property such as theft, vandalism by tenant or guest and/or tenants failure to pay their rent. It’s wise to shop around for the insurance company that meets the needs of the individual owner
- Land tax (generally not paid if property is deemed ‘Principle place of residence’
- Legal fees for tribunal expenses associated with collecting overdue rent or the process of securing a warrant for tenant eviction
- Pest treatment for fleas, termites or other related nasties
- Property repairs – It should be noted that tenants have the right to spend up to $1800 for urgent repairs if they have tried contacting either you (the property owner) or the agent and have not received same day communication. What is deemed an emergency? Hot water burst, serious lift or staircase fault, damage to premises that has caused it to be unsafe or insecure, storm or fire damage and so on (check the Residential Tenancies Act for a full list and steps that tenants must take first)
- Property maintenance (i.e. gutter cleaning, painting etc)
- Replacement of capital items such as carpets, kitchens, pool pumps, dishwasher, oven
- Stationary, postage, telephone calls related to the property and maintenance
- Travel expenses to view the property; petrol (km need to be provided), aeroplane tickets, accommodation and meals (conditions apply)
- Water rates
- Any other related expenses can be checked with TJD Accounting to see if they are allowable claims
- Surveyor fees – If the premises was built after 1985 or the constructions costs are unknown then a Surveyor will need to be employed to provide a depreciation schedule which is used to claim depreciation on the property. We can assist in arranging for this service.
Selling your property? Look into the ATO ‘Clearance Certificate’, this new withholding tax rule was introduced from 1st July 2016
If you’re looking for advice on the best way to finance your property or looking for an accountant with sound knowledge of investment properties and their tax benefits, please contact TJD Accounting Services and we’ll arrange either a discussion over the phone or a time to meet and sort through the right financial structure for you.