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Investment Property Tax Tips: Claiming Expenses

Many property investors are unsure what they can claim as tax deductions which can lead to missed opportunities at tax time. The rules are complex and vary according to personal circumstances, so it’s important to get informed before you buy a rental property. Read on to find out more about some of the common expenses that investors are entitled to claim.

What are property investment expenses?

This refers to any expenses that are incurred relating to the ownership and maintenance of an investment property, such as property management fees, repairs, maintenance, insurance, council rates and more.

It’s important to note that this does not apply to a property that is your private residence, but only to a property that produces rental income.

Are investment property expenses deductible?

Almost all of the expenses relating to owning a rental property are tax deductible. Some expenses are deductible in the year that you incurred the cost, such as interest on the loan, council rates and repairs. Other expenses are claimed over a longer period of time through the decline in value of depreciating assets, such as renovations and construction costs. 

According to the ATO, expenses that can be claimed in the same financial year include:

  • Interest on loans
  • Council rates
  • Repairs and maintenance
  • Depreciating assets costing $300 or less
  • Advertising for tenants
  • Water charges
  • Land tax
  • Cleaning, gardening and lawn mowing
  • Pest control
  • Insurance
  • Legal expenses

Expenses that can be claimed over a longer period include:

  • Some borrowing expenses
  • Renovations
  • Depreciating assets over $300
  • Construction costs for properties built after 17 July 1985

Examples of expenses that can not be claimed include:

  • Stamp duty
  • Repayments of principal against the loan balance
  • Legal expenses for the purchase of the property, your legal fees will form part of the cost base of your property.
  • Expenses paid by your tenants such as water or electricity charges

It’s important to get professional tax advice on what exactly can be claimed this financial year and what must be claimed over a longer period of time. With the right advice, you may be able to make tax deductions you’re not even aware of and further minimise your tax bill.

To give yourself the best chance at building wealth through property, book a free consultation with us today. We offer personalised strategic advice to help you source investment properties that benefit you in the short and long term.