Hi, after reading the forum for the first time today, I noticed there is a lot of helpful information going around, therefore I am new and am hoping someone can help me..
My partner and I started renting out our house towards the end of last year. We know our tenants therefore we are privately renting to them and charging them quite cheap rent $260 each week (we could probably ask for about $290-$300). We have cheaply renovated our kitchen during the period our tenants have been in our house. As tax time is coming up, I am just wondering if anyone knows what percentage of tax we will have to pay on our rental income ($260 per week)?
Thanks in advance.
Also, can anyone please tell me what I can actually claim back on my rental property as well? I have heard I can claim back certain parts of renovations, paint, replacement items, etc? Can I claim back any bills, like water sewage as the tenants only pay their usage?
Ta.
Hi
Tax is done in a couple of different ways. Go to the http://www.ato.gov.au and read up on capital works to understand how you claim on renovations and so on.
The easy answer to your question is:
Get your rental return (which is 260per week) and multiply by the number of weeks you received rent in the financial year (we'll say 28). That gives you $7280 in rental return.
Now for your costs. Let's say your council rates are $800 for the year. You can only claim the portion of the year for which the property became AVAILABLE for rent. That means from when it got rented, or when you started advertising it. Again we'll call this 28 weeks. So you've got $800 x 28/52 = $430.75. You'd do the same with the water bill. You'd do the same with insurance. You can also deduct property management, gardener fees, that sort of thing, if you happen to be paying it.
So:
INCOME
Rental $260 * 28 = $7280EXPENSES
Council Rates $800 * 28/52 = $430.75
Insurance $520 * 28/52 = $280
Water service charges $220 * 28/52 = $118.46
Gardener $10 * 28 = $280
Property Manager $0
TOTAL EXPENSES : $1109.21INCOME MINUS EXPENSES = $7280 – $1109.21 = $6170.79
Then what you do is you work out your other income (eg day job). Let's say you earn $62k gross per year.
You do this: $62,000 + $6170.79 = $68170.79. So your total taxable income is now $68170.79, and you work out your tax as per normal. http://www.ato.gov.au has calculators.
Note: bank interest on a property loan can also be deductable provided that the reason you took out the loan was for investment. Sounds like this is not the case for you – you took out the loan for your "home", not an investment property. If it is going to remain a rental forever, might be worth refinancing so you can redeclare the loan as for investment purposes.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Can you still claim a portion if you the owner is stiill living in the house, but u have someone paying u a weekly rent?
cheers
melIf all else fails, see an accountant
JacM wrote:HiTax is done in a couple of different ways. Go to the http://www.ato.gov.au and read up on capital works to understand how you claim on renovations and so on.
The easy answer to your question is:
Get your rental return (which is 260per week) and multiply by the number of weeks you received rent in the financial year (we'll say 28). That gives you $7280 in rental return.
Now for your costs. Let's say your council rates are $800 for the year. You can only claim the portion of the year for which the property became AVAILABLE for rent. That means from when it got rented, or when you started advertising it. Again we'll call this 28 weeks. So you've got $800 x 28/52 = $430.75. You'd do the same with the water bill. You'd do the same with insurance. You can also deduct property management, gardener fees, that sort of thing, if you happen to be paying it.
So:
INCOME
Rental $260 * 28 = $7280EXPENSES
Council Rates $800 * 28/52 = $430.75
Insurance $520 * 28/52 = $280
Water service charges $220 * 28/52 = $118.46
Gardener $10 * 28 = $280
Property Manager $0
TOTAL EXPENSES : $1109.21INCOME MINUS EXPENSES = $7280 – $1109.21 = $6170.79
Then what you do is you work out your other income (eg day job). Let's say you earn $62k gross per year.
You do this: $62,000 + $6170.79 = $68170.79. So your total taxable income is now $68170.79, and you work out your tax as per normal. http://www.ato.gov.au has calculators.
Note: bank interest on a property loan can also be deductable provided that the reason you took out the loan was for investment. Sounds like this is not the case for you – you took out the loan for your "home", not an investment property. If it is going to remain a rental forever, might be worth refinancing so you can redeclare the loan as for investment purposes.
Excellent advice, although watch out for land tax!
Obtaining a depreciation report will really help you maximise your tax deductions – here's some info about getting started: http://blog.rentwise.com.au/index.php/2010/05/18/depreciation-reports-please-explain
Hi, my partner and I also started renting out 1 room in our new appartment (we are 1st home buyers) and received about 3000 for 5 months. If my income is 60K and my partner is 30K so could I calculate our total taxable income as follow: my taxable income = 60K + 3K/2=61.5K and my partner is 30K+ 3k/2 = 31.5K. Hope someone can help us. Thanks
Mcubed82 wrote:Can you still claim a portion if you the owner is stiill living in the house, but u have someone paying u a weekly rent?
cheers
melYes you can claim a portion. speak to your accountant, who will probably tell you to charge your tenant rent but to not tell the taxman you are doing so, because you'd subject yourself to capital gains tax on the property in the event of a sale… among other disadvantages. Speak to an accountant. They'll give you advice relevant to your exact situation and your exact tax bracket.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks everyone for your help, especially JacM.
Thanks again.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
