Investment Property Tax Tips

Here are some Tax Tips for your Investment Property…

More than a million Australians claimed they lost money on renting out homes in 2005-06, resulting in a collective tax break to them of $3.5 billion, the Australian Taxation Office has revealed.

Here’s a hint:

Play it safe with the ATO and keep all personal, living and family expenses separate from your business and investment expenses so you too can be a claimant. This is especially important when it comes to home office expenses or travel expenses in relation to either business or investment. It is perfectly normal and therefore an acceptable area of deductions for investors, for example to travel to inspect their properties or to engage in other activities on the property directly related to the investment but the documentation must be accurate.

Tax experts advise that claiming depreciation is one of the easiest and most valuable ways to save money at tax time, and yet 80 percent of property investors don’t claim it! A Tax Depreciation Schedule is simply a report on all the items in an investment property that are decreasing in value.

They say too that you need to ensure to claim repairs on your property investment correctly. A repair is generally defined as ‘restoring something to a working condition’. Getting one of your broken hotplates on your stove fixed is grounds for a legitimate repair claim, however buying a brand new stove to replace the ‘tired and old’ looking one cannot be claimed as a repair.

Interest payments represent one of the largest single cost areas so it is not surprising that this is also an area where many investors make incorrect claims. It’s important you claim interest correctly on all of your investment related bank accounts. Make sure that you are not claiming a deduction for any interest on your personal loans.

Line of Credit loans can be tricky. If you have drawn down funds for your investment property and for personal expenditure, you need to separate them.

Filed Under: Tax Tips

Tags: Property Investment • Tax