Investment properties have some great tax deductions that you can use to minimize the
tax that you are paying on your property, however investment property tax deductions
can be very confusing and it can be very hard to understand exactly what tax deductions
you can claim and what you can't claim.
I want to create a list of 20 investment property tax deductions that you might be missing out
on, this is a great overview for you and I gathered it from the ATR website which I will
be linking to on my website When doing your tax deductions for your investment
property it's very important that you understand what you can, and what you can't deduct as
an expense or as to depreciation.
Every single property is going to be different so I do suggest that you speak to professional
accountant to get your own personal deductions done for you, these article, this video, this
podcast should be used for educational purposes only.
What are the 20 different property deductions that you may be missing out on.
Number one is advertising for new tenants, when a tenant leaves your property and you
need a new tenant in place often there is advertising costs associated with that, might
be advertising on domain.com.url realestate.com.u or on the newspaper, especially if you are
doing it yourself, you should be able to claim those deductions if your property is for rental
purposes, make sure that you are looking at claiming those advertising costs.
Number two is bank fees and charges.
If your bank loan is associated with your rental property that generates your income
then your bank fees and charges are a cost to generate that income, you may be able to
claim those as an expense as well.
As always please speak to your accountant if you are unsure.
Number three, cleaning, if you are paying to have the property cleaned, maybe you have
a holiday home that you rent out in a weekly basis or just for a couple of days and then
you have it cleaned, or you have a furnished property and the tenant moves out you need
it cleaned or even if a regular tenant moves out and you need to just get it cleaned a
bit better to get it up to scratch because that's an expense to generate an income you
should be able to claim that as an expense when it comes to tax time.
Number four is the building itself, depending on age of the building, how much you can claim
of the construction cost varies make sure you look into that in more detail.
I've got a great article about depreciation and how to claim it and I will link to that
in the blog post of this video is attached to.
Number five is your light fittings your carpet your curtains and you other depreciable assets,
unlike your building which you can only depreciate from the day that it was created, you are
always constantly adding new things to the property maybe you've updated the carpets
add new curtains in, maybe you need to replace the light fittings, as you replace this things
and as you have this things they have value associated to them which depreciates overtime
you can depreciate those assets I do suggest getting a depreciation schedule
done by a quantity surveyor, because there are so many different ways that things are
depreciated at different rates and it can get very confusing if you are trying to do
it yourself.
Again I have a great article that shows more detail about depreciation which I will link
to below.
Number six is gardening costs, if you are paying to have the gardens maintained, maybe
it's a very large property or maybe you have a couple of properties under one block away
and you are paying to have all the gardens maintained, then you should be able to claim
that cost as well.
Number seven is travel costs to inspect and maintain the property, let's say the property
is interstate or is far away and you need to drive there or fly there you need to stay
overnight to inspect the property or to do some work on the property, then those costs
that are associated with getting to the property and maintaining the property can be claimed
as well you just need to be very careful because if you are using, let's say you live in Sydney
and you got an investment property in the gulf coast and you decide that you are going
to inspect the property but you are also going to have a family holiday for two weeks in
the gulf coast.
Obviously that entitles you to wait you are not working on the property and so you need
to work out exactly how much do it cost and directly associated with managing and improving
the investment property and then what costs are associated with the family holiday and
you can only claim the cost that are associated with the investment property, then any travel
expenses I do recommend you speak to your accountant because this is one of those areas
that people do forge the numbers and probably you are in an area where you are more likely
to get picked up on than something else because people dodge the system.
Number eight is insurances, hopefully you got landlord insurance which will cover you
in the case of the property been destroyed, or tenants doing damage or those sort of things,
as you need your insurance to cover you to help you generate an income that should be
claimable as well.
Number nine is stationary and postage, this is one that a lot of people forget about,
so if you are meaning to use stationery meaning to use postage to interact with your real
estate agent or with the person at that property maybe you are mailing a rental agreement and
those sorts of things, those sorts of costs went directly associated with your investment
property should be claimable, but again speak to your accountant if you are not 100% sure.
Number 10 is interest expenses on your loan, obviously if you get a property and you get
a mortgage for it then you go interest costs associated with that, you need to be careful
with your loan because if you are paying principle and interest is only the interest costs that
tax deductible not the principle that you are paying off the loan as well, you also
need to be careful because if you get an extra loan that secured against your investment
property but it is for private purposes such as to go on a holiday well you can't claim
that as a tax deduction because it's not for income generating purposes.
In most case your interest is tax deductible and you need to make sure that it's used for
the investment property and not for private use.
Number 12 is scrapping, there's a thing called the scrapping schedule which is when you are
doing major renovations to a home and your throwing away a lot of things, maybe you are
ripping out the carpet maybe you are throwing out the old curtains, those things still have
value attached to them on paper and you can depreciate that value through scrapping through
what's called a scrapping schedule.
I've got a video and article about what a scrapping schedule is, and I do recommend
that you get a quantity surveyor to do the scrapping schedule for you, but is a great
way to get extra tax deductions which in most people have no idea about.
Most people do their renovations which is great for the property they might depreciate
the new price they put in but they miss an opportunity for tax saving by scrapping the
old products they took out.
Number 13 is council rates, obviously if you own a property you going to be paying council
rates things like getting the rubbish taken out, maintaining the street all these things
that you need to pay the council for, if your property issues for an income generating purposes
then that should be tax deductible for you.
Number 14 is legal expenses, with legal expenses associated to purchasing or selling the property
aren't necessarily tax deductible in this instance, but if you need ongoing legal counsel
to help you maintain a rental property or you having issues with your tenant and it's
not associated with selling or buying the property then that should be tax deductible,
but again always speak to an accountant for your situation.
Number 15 is repairs and maintenance, if you need to repair something or need to do some
maintenance to the property then in most cases you can claim that, you just need to be careful
because the ATO does have regulations around what you can claim straight away like instantly
and what you need to be depreciate over time.
Look at the ATO website or put a link below and you can see what sort of things can be
claimed as a cash expense and what sort of things need to be claimed as depreciable assets.
Number 16 is pest control, I've lived as a tenant many years and often would need to
get someone to come in to spray the house because it starting to get overrun with pests,
obviously as a rental owner that's a cost that you incur to keep the rental income coming
in because if your house becomes pest ridden home then no one's going to ever want to live
there, that should be something that you could claim as a task depreciation.
What are we up to number 17 land tax, if you own a lot of land lot of properties within
one individual state then you are going to incur what's known as land tax which is in
an extra cost across your portfolio, obviously that comes as a cost of owning investment
properties than you can claim in that as a tax deduction, you just need to be careful
because if you are not using these properties for income generating purposes then you may
need to just claim a portion of the land tax and not the entirety of the land tax.
Number 18 is body corporate face if you own a unit, or if you own a town house, and you
need to pay for the maintenance of the common areas and you are paying body corporate or
strata fees then you are renting the property out then they should be claimable as well.
Number 19 is property agent charges or property manager charges and because real estate agents
would often charge you a bit of percentage of the rental income maybe that's 6% or 7%
or 8% you should be able to claim that on your tax return.
Number 20 lucky last is your utilities, things like water, things like electricity, things
like gas, if you are paying for them yourself and the tenants are not paying for the then
you should be able to claim those as an expense as well as a tax deduction.
There you have 20 investment property tax reductions that you might be missing out on,
if you want more information I will suggest checking out the ATO website which I will
link to directly from my page.
I'm Ryan McLean from positivecashflowaustralia.com.au and you can get more videos more podcasts
and more articles just like this one by heading over to positivecashflow.com.au, or if you
are on your mobile phone you can go to pcm.im which is my short link which will redirect
you to the website, thank you so much for watching and listening.