Hi all, Our IP is in a 15 unit complex that has some special levies coming up for repairs this year. We will have to pay a special levy to repair roof, fence, etc and resurface the pool (a repair i think rather than an improvement). So, Is this expenditure deductable?
Futher, I am in the process of calculating our projected expenses for the year for this property to submit a tax variation form to increase our cash flow and pay off non deductable debt. There is a lease in place, the forthcoming special levies are known and so are the interest costs. What else should i consider as losses? How do i measure depreciation for the year (Built 1983 and reno'd by previous owner 3 years ago) and aply all the above to a tax variation?Hi there,
Your special levy will be tax deductable as maintenance and repairs. It sounds like a lot of work – but split between 15 units, it may not work out to be too much.
As far as your withholding variation goes – firstly you need to have a depreciation schedule done – go to http://www.bmtqs.com.au to find out more. They can do a schedule for the next 20 years and the fee is tax deductable.
Other items you can estimate are: management fee, water, rates etc…
I like to under estimate slightly so that I dont get caught out.
If you go to the ato website, you can download the form and have a look at the info you need. http://www.ato.gov.au/individuals/content.asp?doc=/content/00136083.htm&pc=001/002/043/001/007&mnu=1141&mfp=001/002&st=&cy=1cheers
TracyTracyD,
Underestimating your expenses in the Variation form is a wise thing to do because if you get caught with a tax liability when lodging your tax return, the ATO may disallow you from varying your PAYG tax in future years (this rule is in place to prevent taxpayers from rorting the system by obtaining the benefit of higher cashflow during the year with overestimated tax deductions submitted in the Variation form).
Regards,
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