Newbie question.

Hi Lb,

Loan structure if fine for the conversion from PPOR to IP.

As far as tax goes – all you need to is keep a record of your expenses and income relating to the property. At the end of the year you include your rental income in your income declaration and can claim your expenses as a deduction.

Suggest you grab a copy of the ATOs Rental Guide

Make sure you take out landlords insurance and get a depreciation report done.

Hi LB,

There are a number of companies that provide depreciation reports. Deppro, Washington Brown, Depreciator, BMT are some of the bigger companies. Give them a call and get quotes etc.

The depreciation report is prepared by a quantity surveyor and will have a 40 year (from date of build) life span in most cases. When speaking to the quantity surveyor. They will also be able to advise when it is best to get the report done. 

You cannot claim improvements as a tax deduction – they are depreciable but not deductible like repairs.

If you make a like for like repair then that is a deductible expense – if you make an improvement (new carport & paving) then you will be able to depreciate the value of  the work done. Speak to the Quantity Surveyor about this too – they may suggest getting the work done before you get your depreciation report done.

Worst case scenario keep your receipts and use that to make your depreciation claim – typically this would be around 2.5% of value over 40 years for a carport and/or paving. 

Reality is you may get better benefit (increase in value and/or rent returns) from doing the work now rather than trying to crib a few dollars on your tax return.