Hi all,
I want to ask all your expertise about the tax deduction on your investment property.
From my understanding , what I can claim as a deduction are:
1. Interest charged by my bank
2. Real estate agent fee and commission
3. LMI charged or any fee levied by the bank when I took the loan
4. Strata fee on the unit and Council levy on houseAre there any other things I can claim as deduction?
Thank for your helps!
Don't forget 3, borrowing costs can only be claimed over 5 years or the term of the loan if shorter
Some other stuff
1. Travel to inspect property, repairs, to accountants, to mail box, to agents, to collect rent etc
2. Postage – if need be
3. depreciation of building
4. depreciation of fittings
5. repairs
6. Land tax
7. water rates
8. Insurance (landlords and building (if house))
9. gardening/mowing (eg between tenants)
10 Accounting feesThere must be a few more, but thats all I could think of ATM
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw wrote:Don't forget 3, borrowing costs can only be claimed over 5 years or the term of the loan if shorter1. Travel to inspect property, repairs, to accountants, to mail box, to agents, to collect rent etc
3. depreciation of building
4. depreciation of fittingsThere must be a few more, but thats all I could think of ATM
Thank for reply Terry,
I want to clarify couple of thing:
What is the receipt required for the travel expenses?
How do I get the depreciation of the building and fitting if I want to buy the strata unit? Does ATO have a certain way to calculate it?
Thank again,
DNA4
Hi Terryw
Regarding your point 9. gardening/mowing (eg between tenants)Just wondering how about during tenancy… the maintence of the garden is still tax deductible??
Thanks
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Thank for reply Terry,
I want to clarify couple of thing:
What is the receipt required for the travel expenses?
How do I get the depreciation of the building and fitting if I want to buy the strata unit? Does ATO have a certain way to calculate it?
Thank again,
DNA4
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Hi DNA4
If the original construction costs are unknown – ie they weren't handed over at settlement. The ATO accepts an estimate of the original construction costs by a quantity surveyor – like us.
You can get an estimate of the likely deductions available using our depreciation calculator here:
http://www.washingtonbrown.com.au
all the best with your investment
regards
Tyron
Also in the first tax return, you can claim strata, water rates and council rates you would have paid to the vendor on settlement of the IP. The settlement letter will show the amounts you can claim in the 1st year tax return.
With regards to claiming depreciation of building and fittings, they are certainly deductible during the years of tenancy. But the depreciation claimed must be added back for CGT purposes (i.e reduce your cost base by the depn amounts claimed over the tenancy years and hence increasing your assessable capital gains) when you eventually sell the IP.
dna4 wrote:Terryw wrote:Don't forget 3, borrowing costs can only be claimed over 5 years or the term of the loan if shorter1. Travel to inspect property, repairs, to accountants, to mail box, to agents, to collect rent etc
3. depreciation of building
4. depreciation of fittingsThere must be a few more, but thats all I could think of ATM
Thank for reply Terry,
I want to clarify couple of thing:
What is the receipt required for the travel expenses?
How do I get the depreciation of the building and fitting if I want to buy the strata unit? Does ATO have a certain way to calculate it?
Thank again,
DNA4
Check with your accountant – usually just a diary entry is that that is needed to prove travel. If you are flying interstate, then you can keep your boarding pass and hotel receipts – I think you could also claim meals to a certain extent. You may be able to claim more if you drive though – about 70c/km.
For the gardening, you can claim mowing while a tenant is there – but is this commercially justified? ie is the rent higher to cover this? Otherwise it is usual for a person to mow their own lawn.
Just as a rule of thumb, anything that you spend on your property or to increase rent, attract tenants etc could be claimed. Just start thinking creatively.
what about a guard dog? Can you depreciate a German Shepherd over 5 years? You could probably claim food etc. that reminds me there used to be a list of potential tax deductions at http://www.gatherumgoss.com
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Edvico_kvn wrote:Also in the first tax return, you can claim strata, water rates and council rates you would have paid to the vendor on settlement of the IP. The settlement letter will show the amounts you can claim in the 1st year tax return.With regards to claiming depreciation of building and fittings, they are certainly deductible during the years of tenancy. But the depreciation claimed must be added back for CGT purposes (i.e reduce your cost base by the depn amounts claimed over the tenancy years and hence increasing your assessable capital gains) when you eventually sell the IP.
Kevin
I assume you are only referring to the building allowance.
As the plant should be sold at the written down value.
And don't forget – A Dollar today – is better then a dollar tomorrow!
Regards
Tyron
The ATO is looking at travel claims as the buy your investment in the Gold Coast and it pays for your holiday each year has worn a bit thin.
I think if you have a agent they think one trip a year would be appropriate and if that was the Gold Coast they think fly in and fly out same day.If you do have a holiday while going to inspect your apartment – or do any personal stuff, then you will need to apportion your claim.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
thank for the reply. The take out point – BE creative on the expenses you gonna spent!
Thanks,
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