Property tax tips you should know about as an investor

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on November 25th, 2021       

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As a property investor, there are a few tax savvy claims you can use to help you financially. You need to know what can be claimed as deductions. It is possible to claim on depreciating assets, interest on your loan and more. Here are 7 property tax tips that you can benefit from.

Get your documentation in order

Always keep summaries of your rental income and expenses. This will make it a smoother process when tax time comes. However, if you have a property manager who is already looking after your property and handles all finances this will make it more convenient for you. Also, ensure to keep all bank statements that will show your interest expense. This will also show you what you can claim on.

Claim on depreciation

It is possible for you to claim depreciation on your rental income in a property that you have invested in. Speaking to an authorised quantity surveyor will help you know what exactly you can claim as depreciation. However, this will depend on when you purchased the building. If you have just recently purchased a new property, then you would be able to claim on the property and the assets that come with it. Claiming on assets can only be processed if you have purchased the assets within the building.

Claiming interest expenses

You can claim on borrowed funds that were used to invest into your property. Always ensure to keep your interest expenses well documented to prevent any frustration when the ATO decides to review. It also possible to claim on an investment property’s mortgage that is used for a rental income for a period a year. However, if you also used it for private purposes, you can’t claim interest on that period.

Your home office

For property investors that use your home as your business headquarters then you will be able to claim some expenses. This means that if you used utilities, furniture, and computer equipment, or depreciation of your home office furniture. It will also be handy for you to enlist the help of a qualified accountant who will be able to assess what else can be claimed or not claimed.

Negative gearing and taxes

You will be surprised to find that there are some benefits of purchasing a property using negative gearing. Negative gearing basically means that the amount of rental income you earned is less compared to the expenses of the property. Negative gearing will allow you to claim back your rental losses against your income which in turn will reduce the tax that is payable.

Pay as you go

A pay as you go tax collection method can make it easier for investors who want to make deductions regularly instead of waiting for the end of the financial year. Your tax liability will depend on things such as maintenance, rates, interest and depreciation on your rental property. This is where having an accountant will come in handy to ensure that you submit the necessary financial information to ATO to make this possible. Keep in mind that you will still have to file a tax return at the end of the year.

Property management costs

It is possible for you to claim investment property management costs that include expenses such as:

  • Land tax
  • Insurance
  • Council rates
  • Body corporate fees and charges
  • Accounting or tax agent fees

To get the most out of your claims it will be beneficial to enlist the services of a qualified accountant. Also checking with the ATO in terms of what can be claimed and what documents are needed to make your claim a successful one.

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