By including rental property expenses on your tax return you access an incredible range of possible tax deductions that boost your tax refund and leave more rental income in your pocket.
It’s important to stay on top of your investment property taxes and claim deductions correctly to maximise your tax refund (without getting into hot water with the ATO).
What rental property expenses can you claim on your tax return?
If you own a rental property that you receive an income from, you can usually claim any expense associated with earning that income. Rental property expenses are deductions of expenses relating to owning and operating a rental property. And there are lots of them!
For example, if you pay insurance on your rental property, it is an expense you pay to earn income from the property. If you did not own the investment property, you would not incur the expense.
To help ensure you are making correct claims on your next tax return, we’ve listed 27 investment property tax deductions for you to check before starting your next tax return:
- Advertising for tenants
- Bank charges
- Body corporate fees
- Cleaning
- Council rates
- Electricity (While rented or available for rent)
- Gas (While rented or available for rent)
- Gardening and lawn mowing
- In-house audio/video service charges
- Insurance – building, contents, landlord
- Interest on loans
- Land tax
- Legal expenses (tenant related)
- Mortgage discharge expenses
- Pest control
- Property agent’s fees and commissions
- Capital works (claimed at 2.5% of the cost per year)
- Quantity surveyor’s fees
- Repairs and maintenance
- Secretarial and bookkeeping fees
- Security patrol fees
- Servicing costs e.g. smoke alarms
- Stationery and postage
- Telephone calls and rental
- Tax agent fees
- Water charges
- Property related purchases less than $300 or *Depreciation of purchases above $300.
*Check out low value pooling to fast-track depreciation.
Low-value pooling is a method of depreciating fixtures, fittings, plant and equipment assets within a property at an accelerated rate to maximise deductions and increase an owner’s annual cash flow.
Source: Ray White, Understand Low-Value Pooling
Another useful bit of information:
If you prepay one (or more) of your rental property expenses, such as insurance, that covers a period of 12 months or less, and the period ends on or before June 30, you can claim an immediate deduction. A prepayment that does not meet these two criteria (for example the expense covers you for more than 12 months) may have to be spread out over two or more years so please check with us and we can help!
Do you have a rental property? Have you been claiming all the investment property deductions you were entitled to?
If you use Etax for your tax return, the new tax form makes it easy to enter your investment property expenses. If you have any questions, simply use ‘My Messages’ or ‘Live Chat’ while you do your online tax return. A qualified accountant will get back to you ASAP.
